SAN FRANCISCO – Denver and some smaller cities in the Midwest are showing off their tech chops.
While the San Francisco Bay Area and Seattle dominate the availability of these high-paying jobs and the ability to attract tech workers, cities in the Midwest, Southern California and Canada are also becoming sought-after tech hubs, according to a annual analysis published by commercial real estate firm CBRE.
It ranked the best cities for tech talent, based on metrics like rental costs for employees and companies, as well as available tech talent and job prospects.
The top 10 cities remained largely the same as last year's report, led by the San Francisco Bay Area, Seattle, Washington, DC, Toronto and New York. Denver is the only newcomer, replacing Dallas/Fort Worth.
Smaller markets (fewer than 50,000 tech workers) in the Midwest – where there has been a significant push to attract more tech startups in recent years – saw an increase in the number of tech talent jobs.
These jobs include software developers and programmers. computer, database and systems support tasks. jobs related to technology and engineering; and computer and information systems administrators.
Madison, Wisconsin has added 6,720 tech talent jobs over the past five years, a 39.5% increase to 23,740. Columbus, Ohio and Pittsburgh both added more than 6,700 tech talent jobs over the past five years. The latter two cities are close to surpassing 50,000 tech workers and becoming major tech markets.
In Canada, where the cost of living is generally lower, Toronto has added more than 80,000 tech talent jobs over the past five years, an increase of more than 50%, bringing its total to 212,500 total tech jobs. That's nearly two-thirds the size of the tech talent pool in the San Francisco Bay Area.
In Ottawa, Ontario, jobs for tech talent have grown by about 16% over the past five years.
Some smaller markets in the Midwest and Canada are growing thanks to a more affordable cost of living and cheaper wages, says Colin Yasukochi, director of research and analysis at CBRE. Orange County, California, where UC Irvine is located, is also growing rapidly.
Large tech companies currently employ 37% of the tech workforce. The remaining 63 percent of jobs are in other industries such as finance, insurance, government, transportation and education, among others.
Tech jobs are still a huge plus, both in terms of salary and availability. In the US, these represent 3.5 percent of all workers. But the tech workforce has grown 16 percent over the past five years, three times the national average rate of job growth.
As Amazon continues its search for a city to house its second headquarters, the CBRE report provides insight into what the e-commerce giant might be looking for in a new market.
There are three questions an employer would ask in the case of Amazon, Yasukochi says. How much has the city invested in research and development? Is there an innovative culture and infrastructure? And are the city's universities able to continuously supply tech companies with skilled workers?
“A key theme we've seen over the years, including this year, is that tech employers go where the tech talent is,” Yasukochi said.
The number of tech talent in the San Francisco Bay Area and Seattle continues to grow – thanks to the amount of quality universities and tech infrastructure in these cities. But they are also among the most expensive places to operate.
In the San Francisco Bay Area, where average salaries for tech workers top $125,000 and office rent could be about $4.7 million a year for a 75,000-square-foot office, CBRE estimates that the total annual cost to run a company it would be just over $59 million.
The cheapest of the major tech markets is Montreal, where a business could command about $27.6 million a year.
CBRE also did a brain gain versus brain drain analysis – meaning the researchers mapped the difference between where tech workers are employed and where they were trained.
Toronto topped the list of cities attracting educated tech workers from area universities and elsewhere, adding about 82,000 tech jobs to the pool of 27,000 tech graduates its universities have produced over the past five years. Toronto was followed by the San Francisco Bay Area. Charlotte, North Carolina; Seattle and Atlanta.
On the other hand, cities like Washington, Boston, and Los Angeles lose the most graduates to other markets.
While Los Angeles loses thousands of tech graduates each year to other cities, CBRE researchers say tech companies are starting to notice the large pool of potential workers in Southern California.
“Los Angeles was one of those markets that produced a surplus of graduates,” Yasukochi said. “Tech employers have recognized that this is a good market.”
CBRE has labeled Los Angeles a “momentum market,” or a market whose tech employment has grown rapidly over the past two years.
Orange County, Madison and Ottawa are also considered dynamic markets. And San Diego has added nearly 12,000 jobs for tech talent since 2012, an increase of more than 20 percent.
“Across the country the labor supply is limited,” Yasukochi said. Southern California has graduates from some of the top tech universities in the country, including the University of California, Irvine and Cal Tech, and now companies are starting to strengthen their presence in the region.
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