Perhaps because of the dot-com boom at the turn of the century, there has been speculation that the surging U.S. technology sector could eventually burst. But this time around, it’s not a bubble. Tech adoption is steadily increasing as society becomes more and more dependent on its various forms.
As a result, the industry is growing at an exponential rate. In fact, the tech sector closed 2017 as the largest contributor to U.S. office leasing for the third straight year — responsible for 29.9 million square feet of leasing activity over the calendar year, according to JLL’s U.S. Office Outlook Q4 2017.
As the sector grows its real estate footprint, with new companies forming and major players expanding, finding both affordable real estate and a reliable talent pipeline has become more challenging than ever. But the pipeline can be tapped; just start by following the STEM degrees.
Tapping the Talent Pipeline
Some of the most prominent figures in the tech industry have gotten there without a college degree, but highly skilled talent is the key ingredient to success for tech companies. However, the number of job openings is going up, while the number of qualified candidates is going down.
With the rising costs of real estate near prime talent pipelines such as Stanford and MIT, companies have to get creative with their site selection strategy. You will always find tech talent in San Francisco, Silicon Valley, and Boston, but the cost of doing business in these markets is simply too high for some startups or even established companies looking to expand. But most importantly, companies need to ensure that they tap a location where the talent well won’t dry.
That’s why some of the biggest names in the tech industry have planted roots in Colorado. Boulder, Fort Collins, and the Denver metropolitan area are all among the nation’s top 25 markets for highest rates of educational attainment. In addition to Oracle and IBM, homegrown startups like Webroot and Gusto showcase the state’s deep talent pool.
But it’s not only about having a highly educated workforce. For the tech industry, you need a workforce specialized in computer science, which narrows your options down even more. While California and Massachusetts host 11 of the top 25 computer science degree programs in the U.S., Pennsylvania stands out with four of the top-rated programs. With a strong localized focus on tech and innovation, Pittsburgh is enjoying a growing robotics industry.
Texas has boasted both population and employment growth throughout the current economic cycle, all while continuing to churn out tech talent. Rice University, Texas A&M, and the University of Texas, Austin have some of the best computer science programs in the nation. Unsurprisingly, Austin is a hotspot for startups and established tech companies alike.
By looking at the top markets with the highest rates of science and math degrees, you’ll discover some surprising inclusions. For example, Columbus, Indiana, about 45 miles south of the Indianapolis tech scene, is second only to Silicon Valley. And following Columbus, to round out the top three? Huntsville, Alabama — home to NASA’s Marshall Space Flight Center, Cummings Research Park, and one of University of Alabama’s three campuses.
Another market with a steady pipeline of talent is Ann Arbor, Michigan, home to the University of Michigan and innovative outfits such as ProQuest and the Toyota Technical Center. Michigan is home to two of the nation’s top-rated computer science degree programs.
Catering to Tech Talent
But it’s not just about choosing the right city to access talent. It’s also about deciding where to drop anchor within the metro. Does it make sense to lease in the heart of a business district, or look out to the suburbs? To make that decision, it’s important to understand where millennials prefer to work and live.
Millennials, who will soon comprise more than half of the U.S. workforce, flocked to cities in recent years. But as they age, they may fully complete the circle and move back to the suburbs to raise a family and adopt the slower — and often more affordable — suburban lifestyle. Work-life balance is more of a concept than a reality to many millennials at their current life stage, but that’s bound to change. Therefore, tech companies need to consider the long-term consequences behind their location decisions.
Being Attractive on the Inside
That said, millennials aren’t the only generation to consider. Generation X and even baby-boomers will still be a part of the tech workforce for years to come. In addition to choosing the right location for these workers, designing spaces for all of these generations’ work styles is critical to retention and longstanding appeal for job-seekers.
And for many employees, workspaces of the past just don’t cut it. Today, employees demand a combination of tech-enabled collaborative, creative, and independent work spaces to accommodate various aspects of their work. With vacant spaces unlikely to cater to these needs, investing in workspaces is often required.
Adding the amenities today’s tech employees desire may sound costly, but after buildout costs are considered, tech offices end up being 15 percent cheaper than traditional office spaces. The overall trend to more open space in the office means less physical materials are needed. In turn, hard costs for a tech office fit-out are upwards of $20 cheaper per square foot than for traditional offices — leading to savings that can be applied to equip offices with the modern, high-end technology and amenities that will attract talent.
By carefully considering educational, workplace, and real estate trends, tech companies of all shapes and sizes could come out on top in the fierce battle for tech talent.