A recently released report by JLL shows that STEM graduates are creating new talent pools in unexpected U.S. markets, many of which are located in the heart of the Midwest. While San Jose still tops the U.S. metros with the highest rate of science and math degrees, Columbus, Indiana and Huntsville, Alabama come in a close second and third.
“In an industry characterized by speed and scale, hiring for fast growth has been a challenge in recent years,” said Julia Georgules, Senior Vice President and Director of Technology Research, JLL. “A concentrated focus on STEM in higher education has given tech companies new markets to target outside of traditional tech hubs. Choosing the right location is critical, and looking at nearby talent pipelines is key.”
Over the course of its current seven-year economic growth cycle, there’s been speculation about the tech industry’s sustainability. This time around, however, it’s not a bubble. As tech adoption steadily increases and technologies become more ingrained in our lives, the tech sector continues to be commercial real estate’s biggest customer, driving 22 percent of overall U.S. office leasing year-to-date.
In St. Louis, tech start-ups looking for office space can get a bargain in the Central Business District of downtown St. Louis. The area had a vacancy rate of 20.7 percent following the third quarter and average rental rates of $16.88. Companies like Covo, which is building its first coworking office space outside of San Francisco, are taking advantage of the low rents in the CBD. The company will occupy all of 401 Pine Street, with 41,000 square feet, when renovation is complete later this year.
As tech leasing continues to grow, JLL’s report highlights the key trends set to impact tech companies’ real estate decisions.
The Future of Work is changing, and investing in the workplace is a must.
Gone are the days of simply paying for a prime location to win the war for tech talent. Now, attracting top talent also requires investing in an innovative workspace. But adding the amenities today’s tech employees desire can be costly.
However, tech companies can breathe a sigh of relief. After build-out costs are considered, U.S. tech offices are actually 15 percent cheaper than traditional office spaces. Forward-thinking companies are adding more collaborative and creative workspaces, which JLL’s Future of Work outlook found are among the most important workspace features. More open space means less physical materials, making hard costs less expensive per square foot than traditional offices.
“As tech companies expand, it’s important that they don’t count out the Midwest,” said David Bailes, executive vice president specializing in office leasing and sales. “The realization is that Midwestern cities have a lot to offer when it comes to low cost of living, ample real estate, and talent.”
To learn more about the trends impacting real estate decisions for U.S. tech companies, download JLL’s Tech Office Trends 2017 report.