This story was written for WRAL TechWire Innovator partner CBRE | Raleigh.
When people think about explosive city growth, they often think about the population increase and where everyone is going to live.
While residential housing is certainly a component of urban development, it also begs the question — where are all these people going to work?
When it comes to income, Raleigh is the fourth fastest growing city in America. Last year SmartAsset, a personal finance company, examined data from the Bureau of Labor Statistics that revealed overall income in the area rose 13 percent from 2015 to 2016.
A lot of this growth can be attributed to its flourishing tech industry, as the Triangle is consistently voted as one of the top areas in the country for STEM careers thanks to its Research Triangle Park, many startups and an established higher education system.
A new direct flight from RDU Airport to Silicon Valley emphasizes the ties the Triangle is making with the tech world, while still carving out a space all its own.
A recent Bloomberg analysis even identified Raleigh and Durham as part of its list of top 10 “brain drain” metropolitan cities, referring to cities that attract highly skilled and educated people from other areas.
“Raleigh-Durham continues to be a market that tech companies are focused on expanding or locating in,” said Jason High, executive vice president of occupier services at CBRE|Raleigh, a commercial real estate services provider in the Raleigh-Durham market. “This growth will drive additional tech talent opportunities as these companies take advantage of the key attributes the Raleigh-Durham market has to offer — low cost of doing business, low cost of living and a highly educated talent pool fed by a number of major universities.”
But what exactly defines a “tech talent” market?
Tech companies and jobs must be present, obviously, but according to CBRE, a key aspect that top tech talent markets share is high educational attainment.
In Raleigh-Durham, 49 percent of people ages 25 and up hold a bachelor’s degree or higher. It’s hardly surprising as the Triangle is home to several major universities, technical school, and other higher institutions of learning. While graduates do not always remain in the labor market where they earned their degrees, the Triangle’s job market incentivizes people to stay and others to flock here.
As business opportunities grow, so does the commercial real estate.
Triangle tech companies like Relias, Align Technology, Infosys, Varonis, Pendo and SolarWinds have all relied on large office space deals to house their growing businesses and employees. Last year, Relias signed a deal to relocate its headquarters to a 130,600-square-foot office space in Perimeter Park in Morrisville in 2019.
“Tech talent growth, primarily within the high-tech industry, has added 682,000 employees nationwide in the past five years and [it has] been the top driver of office leasing activity in the U.S. during that time,” stated a CBRE, Inc. research study. “The high-tech industry’s share of major leasing activity nationwide increased to 20 percent in the first quarter of 2018.”
If you are able to remember anything from your Economics 101 class, it’s probably the law of supply and demand. When demand increases, supply decreases and prices increase. This basic principle can be applied to real estate.
“Many tech talent markets, especially those with high concentrations or clusters of tech companies, have seen rising rents and declining vacancies,” the research study continued. “Significant demand for office space in top markets that have added tens of thousands of workers during the past five years raised rents to their highest levels and pushed down vacancy rates to their lowest levels.”
The Triangle is no exception to this trend, but compared to other tech talent markets in the country, it does offer a value of some of the lowest office rents.
“Raleigh-Durham’s affordable office portfolio, coupled with the region’s quality of life, are two of the reasons the market has such a strong resume that establishes it as a premier location to build and grow a tech company,” said Brad Corsmeier, executive vice president with CBRE|Raleigh’s Investor Leasing group.
Every year, CBRE conducts a comprehensive analysis of labor market conditions, cost, and quality in the U.S. and Canada for highly skilled tech workers. The CBRE Scoring Tech Talent research rankings placed Raleigh-Durham as number eight in the country and also found the Triangle is “an outstanding market to find top-tier tech talent at an affordable price.”
The area can also pat itself on the back for tying first overall for the highest percentage of women working in the tech industry, as 30 percent of the local tech talent here is female. This is better than the national average of 20 percent of women.
Additionally, interest from companies like Apple and Amazon proves the Triangle has put itself on the map, and as tech talent continues to grow, one thing is certain — so will commercial real estate.
“The technology sector remains the most active in our CBD and suburban office markets. We continue to see major technology companies move to Raleigh-Durham for our qualified workforce and low office rates compared to other major tech markets,” Corsmeier said. “As the market continues to grow, we expect these opportunities to attract the tech companies to our market and for Raleigh-Durham to further grow as a key tech talent player in the nation.”
This story was written for WRAL TechWire Innovator partner CBRE | Raleigh.
