2018 Report Card Scores Tech Talent and Tracks its Development in North America
CBRE'S annual report on the labor force's tech sector spells objective positives and negatives for communities across the continent with clear, comprehensive and data-driven analysis.
As the pace of technological change continues to accelerate and we rely on technology to a greater extent than any time in human history, highly trained, high skilled tech workers are becoming increasingly essential to everyday life. And harder to find. The various subsectors that make up today's giant tech economy have been booming for so many years now that North America is currently short on tech workers. There are more tech jobs available than there are available workers to fill them. The same is true in the broader economy. The Labor Department reported recently that the number of open jobs overall outnumbered U.S. unemployed for 3rd month in a row.
Technology is integrated into nearly everything we do, highlighting the growing scope of devices and software that form the Internet of Things (IOT). Highly skilled tech talent workers create and enable this evolving culture between work and home. Computers in the home and workplace are commonplace today, but new tools (i.e. wearable technology, Wi-Fi enabled devices and sensors and voice-activated home assistants) are becoming more ubiquitous, and expectations for fast deliveries and real-time information updates are increasing. Technology is the future and companies across all industries are expanding their innovation capabilities to satisfy changing consumer demands.
Since high skilled labor is the life’s blood of innovation and implementation, tracking tech workers is a keen focus of many concerned stakeholders, not the least of which are the companies needing to hire talented tech workers and the communities trying to develop and/or retain companies and workers.
For six years now, CBRE, a global commercial real estate services, investment and research firm, has produced a comprehensive and detailed report on tech workers. This year’s report, Scoring Tech Talent in North America 2018, is an excellent snapshot of continental tech workers built from a variety of data. The 100-page report is relied on by many in the industry as a benchmark, until the following year's report.
CBRE’s report ranks 50 U.S. and Canadian markets according to their ability to attract and grow tech talent. The 2018 Scoring Tech Talent report summarizes that:
What is ‘Tech Talent’?
Nearly 6 million highly skilled tech talent workers are leading global innovation that will shape our daily lives and drive the economy forward. These tech talent workers comprise 20 different occupations, from software developers who enable the devices we depend on, to systems and data managers who ensure that our tech ecosystems function. These positions are highly concentrated within the high-tech services industry buy are spread across all industry sectors. Using this defintion, a software developer who works for a logistics or financial services company is included in CBRE’s report.
The 5 million tech talent workers in the U.S. and 834,000 in Canada account for 3.5% and 5.3% of total workers in each country, respectively. This relatively small labor force has an outsized impact on real estate markets and the economies. And there is tremendous momentum in the growth of the tech workforce. The number of tech talent workers has increased by 16% in the past five years, adding 682,000 jobs in the U.S. economy at a pace more than 3X the national average. These high-skilled, highly productive workers are fueling new innovation and adapting technology with non-traditional tech sectors to increase productivity and strengthen the national economy.
Top-ranked tech talent markets
The highly competitive and supply-constrained market for tech talent, along with advanced communications infrastructure, has accelerated the expansion of tech talent pools beyond major hubs and into smaller markets. These previously undersupplied regions are experiencing growth in tech talent from both start-ups and established companies. Accordingly, demand for commercial real estate to accommodate this growing workforce is also increasing.
In its analysis, CBRE examined the fifty largest markets by number of tech talent professionals in the U.S. and Canada to create a scorecard. The scorecard uses 13 metrics to measure each market’s depth, vitality and attractiveness to companies seeking tech talent and to tech workers seeking employment. Each metric was weighted by CBRE according to its relative importance to job creation and innovation. Tech talent concentration metrics have the highest weights because they signify clustering of tech workers. Labor costs for tech talent were weighted more heavily than office rents because companies allocate more capital to labor than to real estate.
The top 3 markets in CBRE’s Tech Talent 2018 Report are San Francisco, Seattle and Washington D.C. The top 2 spots were unchanged, but Washington D.C. jumped from 4th to 3rd compared to CBRE’s 2017 report. Toronto moved up two positions to fourth overall, while Boston and Pittsburgh both jumped two spots to 6th and 28th, respectively. Markets registering the greatest rise in the rankings are Cleveland, Columbus and San Diego.
Dive deeper into the data using CBRE's interactive Tech Talent Analyzer. Explore market rankings, labor pool size, growth and cost structures. Use filters based on your unique needs to compare markets and get a detailed market profile.
Tech talent job growth has accelerated in 23 of 50 markets, with notable surges in Ottawa, Los Angeles and Madison, Wisconsin.
OPERATING COST: The highest and lowest cost markets
The typical 500-person tech company needing 75,000 sq. ft. of office space can expect a total annual operating cost to range from $27 million in Montreal to $59 million in the San Francisco Bay Area.
TALENT: Supply, demand and the quality conundrum
Quality tech talent is becoming costlier and is creating a conundrum of how to balance these two decision drivers. The number and concentration of top-tier software engineers in each market were weighed against compensation costs. The San Francisco Bay Area and Seattle score highest for both quality and cost. The best value markets are in Canada and the Midwest.