By Cribb Altman
Technology is officially the dominant sector in the U.S. office market—and that’s unlikely to change any time soon.
In 2018, the technology sector in the U.S. cemented its position as a major driver for the U.S. economy and office market, according to Cushman & Wakefield research. Funding for tech-related businesses soared and the number of companies with valuations of $1 billion or more—known as “unicorns”—reached a record 156. Venture capital investments roughly doubled in 2018, rising from $72 billion in 2017 to $131 billion in 2018, the largest amount invested by venture capital funds since the all-time high of $188 billion in 2000.
In the Dallas area, tech leasing is starting to have a growing impact on the economy, in general, and on the commercial real estate market in particular. In fact, North Texas ranked No. 7 in CompTIA’s ranking of the top “cybercities” by net tech employment. With nearly 350,000 tech positions, we even managed to rank above Seattle and Chicago. And our tech footprint is growing; the same report ranked DFW No. 6 for net tech employment gains, with more than 9,000 jobs added over the previous year.
As the Dallas lead for Cushman & Wakefield’s Emerging Technology Advisory Group, I’ve seen our local tech industry really begin to grow in the last few years. Today, 80% of the tech companies I’m working with are either expanding their current footprint or are brand new to the market.
Although when many people think of a tech firm, their minds might go to Google or Facebook, tech is actually a very diverse set of industries. There are 46 individual tech industries, including streaming video, digital advertising and internet publishing to virtual reality, video gaming, cloud computing, cyber security, transportation and artificial intelligence. Dallas is home to a diverse array of technology firms, but software, cyber security and artificial intelligence are all on the rise. Fintech—the use of technology in the financial sector—is also big in Dallas and has become one of the fastest-growing employment categories in finance.
When a tech company moves to or expands in Dallas, it usually has a few special considerations to take into account. Tech firms typically operate in dense, open floor plans that encourage collaboration, so abundant parking is a must. These companies also prioritize talent acquisition and retention, so they’re often drawn to office developments in attractive “live, work, play” settings, like those that I explored in my last blog, “DFW’s Top 10 Locations for Attracting, Retaining Talent.”
Of course, these types of trends aren’t confined to Dallas. Tech leasing is huge in areas like Silicon Valley and New York City. In fact, the 10 markets with the largest volume of tech leasing accounted for 75% of the tech leasing. Clearly, Dallas has more room to grow in terms of its slice of the tech pie. However, our business-friendly economy, strong labor force and low cost of living make this area incredibly attractive to new and growing companies. Tech firms are starting to take notice; in fact, the Dallas Business Journal reported this month that emerging tech job postings grew 123% in Dallas last year.
Now that technology has emerged as the dominant sector in the U.S. office market, I wouldn’t be surprised if Dallas’ tech growth continues to accelerate in the coming years. Considering everything this area has to offer, it’s a natural fit for tech firms of all sizes.
Cribb Altman is a Senior Director within Cushman & Wakefield’s Tenant Representation Group and the Dallas lead for the firm’s Emerging Technology Advisory Group.