By Robert Sammons, Senior Director, Northern California Research
Currently 80% of the United States population lives in cities and in the last decade, 84% of our country’s GDP was generated by large metropolises. And while cities are driving growth, there’s an underlying factor that deserves recognition. That factor is technology, specifically technology companies.
There’s a lot to be said about where a technology company sets up shop. Virtually every economic and commercial real estate (CRE) metric, including GDP, jobs, household income, absorption, rents, and more are impacted by where and when tech companies put down roots. It’s not just the technology these companies are creating — autonomous vehicles, blockchain, ridesharing, drones, etc. — but it’s the companies themselves as well. Their physical footprint and their employees. Since the beginning of 2017, tech companies have accounted for 42% of the square footage in the top 100 leases in North America. That is more than double the share accounted by the number two industry, financial services.
Living and working in San Francisco, this is a conversation I see play out every day. Multinational tech companies, including Salesforce, Airbnb, Uber and Lyft are all headquartered here. And until this past year, Facebook had no major office presence in San Francisco. Now, the social media giant is the city’s third-largest tenant, with almost 1.5 million square feet of space. Six of the top 10 private occupiers of space, in fact, are considered tech — though within a wide variety of industries.
And I know conversations like this aren’t just happening in the Bay Area. Across the country, city leaders, businesses and residents are having genuine discussions on how these companies will impact their homes and markets.
So last year, Cushman and Wakefield set out to take a closer look at “tech cities” — the urban environments that aren’t just home to tech firms, but those which are also conducive to, and have the physical and human capital necessary to sustain these companies. The inaugural, “Tech Cities 1.0” was unprecedented and set a new course for how the real estate industry should study and approach these new players.
That’s why this year, we’re following up with a second report, “Tech Cities 2.0”, which identifies the top 25 tech-centric cities in North America. These “Tech 25” falls into three major categories:
· Those cities in which Tech is a critical component of the local economy and CRE market; a total of 10 cities are in this category.
· Cities in which Tech is a key driver of the local economy and CRE market; eight cities are in this cluster.
· Cities in which Tech is important to the local economy and CRE market, other important sectors are as well; seven cities are in this tier.
In this report, we also wanted to expand upon the initial findings of the original by digging deeper into these rising urban markets not traditionally identified as technology hubs. For example, our research discovered that the fastest-growing tech employment market in North America from 2010 through 2017 wasn’t Silicon Valley, San Francisco or Boston. It was Provo, UT. Since the end of the last recession through the second quarter of 2018, the number of workers at tech companies in Provo has increased 64.9%, surpassing the 62.7% increase in San Francisco.
While we have learned a tremendous amount about our current urban and commercial real estate trajectory through these reports, there is still much to uncover.
To see the rest of our results and insights, please check out the full report here.
 Sourced from “Disruptive Technology and Digital Cities Program” Deck | McKinsey Global Institute City-Scope