More U.S. and Canadian Office Markets Ride Wave of High-Tech Hiring
Jones Lang LaSalle's latest sector report sees high-tech industry "hitting above its weight" in driving office market fundamentals in more cities
SAN FRANCISCO, May 7, 2012 /PRNewswire/ -- Strong growth in high-tech sector hiring and increasing competition between firms for talent created new tech-oriented submarkets around the U.S. and Canada in the first quarter of 2012, according to Jones Lang LaSalle's High Tech Industry Report.
"Despite high-tech's relatively small footprint in office markets, accounting for just 8.5 percent of all jobs using office space, it has had a tremendous impact on the absorption of office space in the top five tech-oriented markets. Additionally, the sector's recent employment growth — roughly three times the overall U.S. employment rate – has begun to affect a growing number of other markets around the U.S. and Canada," said Colin Yasukochi, Northwest Director of Research, Jones Lang LaSalle.
Jones Lang LaSalle estimates that high tech accounts for nearly one-third of recent office market absorption nationwide. The top five markets of Boston, New York, San Francisco, Seattle and Silicon Valley recorded annual rent growth across key tech-oriented submarkets between 16.8 and 57.9 percent in the first quarter.
"We're now seeing strong evidence of the 'high-tech effect' spreading out beyond the five major markets as companies in the technology sector both expand their business models and engage in a vigorous battle to land new pools of talent. This quest for more human capital is increasingly pushing firms to look outside traditional tech cities to set up new operations," Yasukochi said.
The submarkets that saw positive annual rent growth in the period included Vancouver's Yaletown submarket; Boulder, Colorado; downtown Pittsburgh; Washington, D.C.'s East End; and the West Loop submarket of Houston, Texas.
High-tech demand for office space, which has led to rent recovery in many markets adversely affected by the financial downturn, is now spurring speculative construction activity in the office sector for the first time in more than five years.
"In markets like San Francisco, where high-tech demand is intense and tenants have been snapping up creatively configured office environments, there are very few large blocks of space available to accommodate additional growth. With rents rising, we are now at the point where new construction — for those with access to capital to build – is now coming to the drawing board," Yasukochi said. Recently, a New York-based developer announced plans to build a spec office tower in San Francisco's South of Market neighborhood, the first such development in the city since 2006.
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE: JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company's investment management business, is one of the world's largest and most diverse in real estate with $47.2 billion of assets under management. For further information, please visit www.joneslanglasalle.com.
SOURCE Jones Lang LaSalle
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