A world-class workforce. An influx of capital. A new crop of disruptive players. Welcome to the Los Angeles tech scene in 2018 where ripe conditions have fueled a thriving ecosystem and sparked big changes in local communities.
Call it the “tech effect.” In real estate markets across the country, fast-growing tech companies have become one of most powerful forces for change. Hungry for space and talent, these firms play a key part in creating jobs, boosting leasing activity, and igniting demand for more inventory, a process that helps attract residents and spark new development.
These forces are alive and well in Los Angeles, a fact driven home by the newly released Tech Cities 2.0 report from Cushman & Wakefield. The report names Greater LA as one of the top 25 technology markets in North America, a reflection of the strength and influence of our local industry. From biotech breakthroughs to evolutions in eCommerce, here are the factors that make Los Angeles a top tech location, and the ways in which the industry is transforming the region from the ground up.
The Right Stuff
To become a tech hotspot, a city needs just the right mix of ingredients, many of which Los Angeles has in spades. To start, the region hosts a vast supply of talent. Greater Los Angeles, which as measured in Tech Cities 2.0 includes Orange County, supports jobs for nearly 270,000 workers in software engineering, programming, medical research, and other highly skilled STEM professions. For context, that’s second only to New York and Washington, D.C. among North American metros. This hearty supply makes Los Angeles an attractive location for budding startups and internet giants alike, offering them a large, well-trained workforce to recruit from.
Los Angeles also benefits from a steady supply of venture capital (VC), which has helped power local entrepreneurs in their quest for growth. More money was poured into LA and OC companies last year than in many leading markets, including Seattle and Toronto. Investment growth here has even outpaced the growth in funding received by companies in Silicon Valley, the global epicenter of the VC industry. All these elements help create a fertile environment where companies can take root and thrive.
Tech: Los Angeles Style
This pool of resources has nurtured and attracted companies from all different facets of tech. In Los Angeles County, some of the strongest growth has occurred in the realm of digital media and retail. Companies such as Netflix, Hulu, and YouTube have taken advantage of the region’s entertainment roots, leasing up offices and soundstages to support their efforts in content creation. eCommerce has also become a key player in LA’s tech scene, with major beauty and fashion brands setting up shop in the area.
Meanwhile, Orange County has seen significant growth in areas such as HealthTech. Irvine is home to major offices from leading biotech researchers and medical engineering companies, including Allergan and Edwards Lifesciences. OC has also become a launching pad for cybersecurity innovators like Cylance, a maker of AI-based antivirus and anti-malware programs.
Redrawing the Map
In the past five years, the top technology and digital media companies in Greater LA expanded their physical footprint by almost 675%, a rapid pace of growth that has spurred significant changes in several key submarkets. Some of the impact has centered on Silicon Beach, the string of startup-friendly communities running from Santa Monica to El Segundo. Yet the momentum is also spreading inland, as companies forge ahead into new areas.
Case in point: Culver City. This long-time entertainment hub is fast becoming ground zero for the next generation of digital storytelling. Both Amazon Studios and Apple signed major leases in the past year, choosing the city as home base for their original content and streaming divisions. Other areas are also picking up steam. Take Downtown LA’s trendy Arts District, where Spotify recently snatched up a large office space for its regional headquarters.
Many of these emerging “tech clusters” share a few things in common: engaging amenities, premier creative offices, proximity to mass transit. All this spells opportunity to firms who want a location that provides easy commutes and fun attractions, as well as the fresh, “creative” workspaces that are now synonymous with tech environments.
“Areas like Culver City, Hollywood, and Downtown LA check off just about all of these boxes on a company’s wish list: transportation, urbanization, great shops and restaurants” says Marques Williams, Director at Cushman & Wakefield and part of the firm’s Media & Technology Practice Group.
As these areas grow more popular, developers are taking note. In Hollywood, for example, investors are planning to roll out a series of new mixed-use developments, hoping to capture the live-work-play atmosphere that tech occupiers demand. It’s a perfect demonstration of the “tech effect” in action: where technology tenants lead, commercial real estate often follows.
What the Future Holds
Technology will almost certainly become an even stronger influence on the Greater LA market in coming years. Younger, less cash-rich companies will likely be attracted by the region’s affordability compared to places like the Bay Area, where housing costs and office rents have spiked dramatically in recent years.
“A lot of startups in particular are exploring alternative locations outside the Bay Area, and LA is a perfect prime location for that,” says Robert Sammons, Senior Director of Northern California Research for Cushman & Wakefield.
One thing is for certain: as technology intertwines with business and personal life more deeply than ever before, the industry will continue to drive, disrupt, and instigate major changes throughout Los Angeles and beyond. It’s a tech company’s world—the rest of us just live in it.