When leading real estate market analysts put a metro at or near the top of their rankings, it may be a coincidence. Or it may be worth a closer look. By two key measures in recent weeks — as a U.S. Market to Watch: Overall Real Estate Prospects (Emerging Trends in Real Estate 2018® from PwC and the Urban Land Institute) and as a market for high-quality tech talent (CBRE’s 2017 Scoring Tech Talent Report) — the Seattle metro is a winning location.
On the first measure, as an overall market to watch for real estate value, Seattle ranks first, followed by Austin, Salt Lake City, Raleigh/Durham and Dallas/Fort Worth. This and other rankings in the extensive report are based on survey responses from more than 1,600 participants from the world of real estate finance and investment. Seattle ranked fourth in the 2017 analysis. Why did it jump to first place? Being “one of the top 18-hour cities and emerging gateway markets in the country” didn’t hurt, to use the report’s characterization of the city. Nor did its concentration of educated workers: “Seattle, San Francisco and San Jose can boast not only a highly educated workforce, but also significant density of talent.”
Stiff Competition for Talent
|San Francisco Bay Area, CA||81.28|
|New York, NY||64.21|
|Toronto, Ontario, CAN||59.30|
|Dallas-Fort Worth, TX||55.40|
Which brings us to the second recognition, CBRE’s ranking of metros by tech talent, specifically those meeting a “strong demand for skills such as software development, hardware engineering and information security, coupled with a tight labor supply, [which] is driving companies to locate in markets with the largest concentrations of high-quality talent,” according to CBRE.
The rankings for the Tech Talent Scorecard are determined based on 13 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. The top 10 cities on the Tech Talent Scorecard were all large markets, each with a tech labor pool of more than 50,000 (see chart).
According to CBRE’s analysis, which can be viewed in detail through an interactive Tech Talent Analyzer, the best-value markets with the highest quality of talent are Toronto and Vancouver (due in part to the strong US dollar) followed by Indianapolis, Pittsburgh and Detroit.
“Since the cost of talent is the largest expense for most firms, the quality of that tech talent is becoming one of their most important considerations. The skills of the available labor pool do not appear to align with available jobs, causing a structural impediment to growth for companies across North America,” said Colin Yasukochi, director of research and analysis for CBRE in the San Francisco Bay Area. “Only 37 percent of all tech-talent workers are employed in the high-tech industry, meaning tech companies must compete with other industries that employ the remaining 63 percent of tech workers. In addition, the unemployment rate for college-educated workers is around 2.3 percent in the US, further stiffening competition. All of this means that, more than ever before, top tech talent comes at a cost today,” he added.