Salt Lake City—November 4, 2019—For the second year in a row, Salt Lake City’s Tech Corridor has ranked #1 in the U.S. for office net absorption growth (growth in occupied office space) on CBRE’s annual Tech-30 report, which measures the tech industry’s impact on the 30 leading tech-centric office markets in the U.S. and Canada. The local Tech Corridor posted net absorption growth of 15.9%, beating out other submarkets like East Cambridge in Boston (14.8%) and Vancouver’s Broadway Corridor (10.1%). Salt Lake City also ranked ninth in overall job growth, according to the report.
Net Absorption Growth Top Tech Submarket – Q3 2017-Q2 2019 (% of Total Building Supply)
|Submarket||Net Absorption Growth|
|Tech Corridor (SLC)||15.9%|
|East Cambridge (BOS)||14.8%|
|Broadway Corridor (VAN)||10.1%|
|Lake Union (SEA)||8.8%|
|RTP/I-40 Corridor (R-D)||8.1%|
|Ann Arbor (DET)||7.1%|
“The fact that the Salt Lake City Tech Corridor ranked #1 for absorption and landed in the top 10 for markets with high job growth illustrates the relationship between job growth and absorption—as the local tech industry expands and creates more jobs, additional office space is needed to house it,” noted Eric Smith, senior vice president at CBRE. “It’s safe to say our local tech industry is steadily expanding and gaining traction on a national level—it’s not a fluke, Salt Lake’s tech market is here to stay.”
The tech industry has claimed an increasingly larger share of major U.S. office-leasing activity as real estate and economic indicators point to continued momentum for the sector over the next two years. CBRE’s analysis found that tech companies accounted for 21 percent of major office-leasing activity in the first half of this year, up from 11% when CBRE began tracking the figures in 2011. Strong leasing activity is fueled by the tech sector’s robust job growth, which even as it slowed to 4.5 percent in this year’s first half due to tight labor conditions, is still more than double the national job-growth rate.
“The North American tech industry has diversified its economic base as it has grown, expanding its presence in many Tech-30 markets,” said Colin Yasukochi, executive director for research for CBRE’s Tech and Media Practice and co-author of the report. “Meanwhile, large tech companies have been an ongoing source of demand; the 10 most active tech companies leasing office space since 2013 account for 27 percent of overall tech-industry leasing.”
Office-rent growth has been strong for the Tech-30 in the past two years, with 10 markets posting double-digit percentage growth in average rents over this period, led by San Francisco. Overall, rents increased in 28 of the Tech-30 markets since 2017. Rent growth in Salt Lake City, however, is an exception to this and was one of just two markets included in the report which showed negative rent growth, at -0.5%. This is a positive figure for those searching to lease space in the area and highlight’s the area’s relative affordability when compared with competing tech markets.
CBRE’s report examines rent gains, rent premiums and net absorption in submarkets that have emerged as tech hot spots within their cities. CBRE’s analysis found that leading tech submarkets registered an office-rent premium of 14 percent in comparison with the average in their respective cities. Among those with the biggest rent-growth percentages in the past two years are Midtown Atlanta (+28.1 percent), Raleigh-Durham’s RTP/I-40 Corridor (+24.1 percent) and Downtown Nashville (+19.4 percent).
To read the full report, click here.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.