With 50.9 percent growth in tech talent since 2010, Tampa is #8 on the list of top “momentum markets”
TAMPA, FL. – JUNE 30, 2016 – Tampa has one of the strongest tech talent growth rates in the nation, according to CBRE Group, Inc.’s annual report, “Scoring Tech Talent.” The report, which ranks 50 U.S. and Canadian markets according to their ability to attract and grow tech talent, places Tampa at #8 on the list of top “momentum markets,” based on its tech talent growth rate of 50.9 percent since 2010.
“Tech talent growth rates are the best indicator of labor pool momentum and it’s easily quantifiable to identify the markets where demand for tech workers has surged,” said Colin Yasukochi, who authored the report on behalf of CBRE Research. “Tech talent growth, primarily within the high-tech industry, has recently been the top driver of office leasing activity in the U.S.”
While well established tech markets like the San Francisco Bay Area, Washington, D.C., and Seattle once again took the top spots on this year’s Tech Talent Scorecard, the report showed that competition for talent is getting tougher, as more highly skilled tech works—especially millennials—flock to cities with a growing tech presence like Tampa. At #27 on the 50-city Scorecard, Tampa was one of the top ranked “small markets,” defined as a market with a tech labor pool of less than 50,000.
“Tech talent markets share several distinct characteristics, including high concentrations of college educated workers, major universities producing tech graduates and large millennial populations,” said Yasukochi. “The robust entrance of millennials into the labor pool contributed greatly to the growth in tech talent across all 50 downtown markets in our ranking this year.”
Benefitting from growth in the tech sector, office asking rents have risen in Tampa 3.8 percent to $21.02 per sq. ft. from Q1 2011 through Q1 2016. Over the same period, the vacancy rate has dropped 920 basis points to 12.5 percent, the fourth-largest vacancy rate decrease among the markets included in the CBRE study, behind only Austin, Toronto and Vancouver.
While the cost of office space has increased since 2011, Tampa still has a low cost of doing business, especially compared to the 50 markets included in the CBRE study. Tampa had the seventh-lowest costs in CBRE’s analysis of estimated one-year costs in terms of wage and rent obligation for a sample tech firm with 500 employees and 75,000 sq. ft. of office space, with an estimated total cost of $34.6 million.
“Employment growth in tech occupations has a multiplier effect that spurs economic growth, which in turn drives demand for commercial real estate,” said Quinn Eddins, Director of Research & Analysis for CBRE Florida. “Fortunately, Florida markets have some of the fastest-growing tech talent labor pools in the country. Tampa’s tech labor pool increased 50.9 percent from 2010 to 2015, the fourth-fastest growth rate among U.S. markets with less than 50,000 tech workers.”
Influential Factors Shaping Tech Markets Today
The CBRE report highlighted several influential factors shaping both large and small tech markets today.
• Educational Attainment/Tech Degrees: Nearly 70 percent of the top 50 tech talent markets have an educational attainment rate above the U.S. average (30 percent). More relevant to this study is the number of graduates who have earned technology degrees. The top 10 markets ranked by the number of tech degrees completed were New York, Washington, D.C., Los Angeles, Chicago, Phoenix, Boston, the San Francisco Bay Area, Atlanta, Columbus and Detroit. Tampa produced 7,082 tech graduates between 2010 and 2014 and added 14,740 tech jobs between 2011 and 2015, for a net gain of 7,658, good for 11th place on CBRE’s “brain gain or drain” list.
• Cost of Living: According to Moody’s Analytics, 36 of the top 50 tech talent markets have a cost of living above the U.S. national average. CBRE compared the average apartment rent to the average tech-worker wage in each market and found that even in the most expensive markets, tech wages are able to cover the high cost of living (using the affordability benchmark that allocates 30 percent of income to housing). That said, top momentum markets like Charlotte and Nashville, clearly benefited from affordability with wage-to-apartment rent ratios of only 13 percent and 17 percent respectively. Oklahoma City, #5 on the momentum market list, has a wage to apartment rent ratio of just 12 percent, making it the most affordable of all 50 markets examined in the CBRE report. Tampa has an apartment rent to wage ratio of 16.7 percent.
• Presence of millennials: The presence of higher educational institutions helps markets to attract high concentrations of millennials. Madison, Pittsburgh and Boston took the top spots, each boasting millennials as 25 percent or more of the total population. Six large tech markets increased their millennial population by more than 10 percent since 2009, with Washington, D.C. growing the fastest at 27.1 percent. During the same period, five of the smaller tech markets increased their millennial population by more than 10 percent with Salt Lake City and Richmond growing at significantly faster rates than the others. Tampa’s population of 20-something millennials grew by 5,100, or nearly 10 percent, since 2009. That’s 35 percent of the total growth in a population of 359,000.
Tech Talent Scorecard
Rankings for the Tech Talent Scorecard are determined based on 13 unique metrics including tech talent supply, growth, concentration, cost, completed tech degrees, industry outlook for job growth, and market outlook for both office and apartment rent cost growth. San Francisco Bay Area, Washington, D.C., and Seattle, once again dominated the top spots on the 2016 “Tech Talent Scorecard,” with New York and Austin rounding out the top five—a boost for Austin which ranked #8 last year.
The top 10-ranked cities on the Tech Talent Scorecard were all large markets with a tech labor pool of more than 50,000. In the number 6-10 slots were Dallas/Ft. Worth, Boston, Raleigh-Durham, Atlanta and Baltimore. Rounding out the top 15 were Phoenix, Toronto, Chicago, Orange County and Minneapolis.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.