by Brianna Crandall — November 22, 2017 — Science, technology, engineering and mathematics (STEM) graduates are creating new talent pools in unexpected US markets, and build-outs to accommodate them may cost less than you think, according to a new report by global financial and professional services firm JLL. As it becomes more and more difficult to attract highly skilled talent, tech companies should consider looking outside of traditional tech hubs and exploring these new markets that also offer cost advantages compared to major urban metros, says JLL.
San Jose still tops the US metros with the highest rates of STEM degrees. But Columbus, Indiana, home to one of Purdue’s Polytechnic institutes and just 45 miles south of the burgeoning Indianapolis tech scene, comes in a close second. Rounding out the top three is Huntsville, Alabama. It is home to both NASA’s Marshall Space Flight Center and Cummings Research Park, the second-largest research park in the country, as well as one of University of Alabama’s three campuses.
Julia Georgules, senior vice president and director of Technology Research, JLL, pointed out:
In an industry characterized by speed and scale, hiring for fast growth has been a challenge in recent years. A concentrated focus on STEM in higher education has given tech companies new markets to target outside of traditional tech hubs. Choosing the right location is critical, and looking at nearby talent pipelines is key.
Over the course of its current seven-year economic growth cycle, there has been speculation about the tech industry’s sustainability. This time around, however, it’s not a bubble, says JLL. As tech adoption steadily increases and technologies become more ingrained in our lives, the tech sector continues to be commercial real estate’s biggest customer, driving 22 percent of overall US office leasing year-to-date.
Steffen Kammerer, senior vice president and leader of JLL’s Technology group, added:
Tech leasing is on track to surpass the already strong activity we’ve seen over the past two years, thanks to an overall economic shift toward innovation and technology. Leasing has permeated into markets across the country, leading to niche specializations in smaller markets, such as fintech in Atlanta and robotics in Pittsburgh, where we’ve recently seen companies such as Uber establish a satellite presence. The tech industry is becoming a more integrated part of local economies.
As tech leasing continues to grow, JLL’s report highlights the key trends set to impact tech companies’ real estate decisions.
The Future of Work is changing, and investing in the workplace is a must
Gone are the days of simply paying for a prime location to win the war for tech talent, according to JLL. Now, attracting top talent also requires investing in an innovative workspace. But adding the amenities today’s tech employees desire can be costly.
However, tech companies can breathe a sigh of relief, says the firm. After build-out costs are considered, US tech offices are actually 15 percent cheaper than traditional office spaces.
Forward-looking tech companies are adding more collaborative and creative work spaces to their offices, which JLL’s Future of Work outlook found are among the most important workspace features. More open space means fewer physical materials, making hard costs for tech office build-outs over $20 less expensive per square foot than traditional fit-outs.
These savings help account for the typically higher costs tech companies pay to equip their office with high-end technology and amenities that appeal to top talent.
Generations matter more than you might think
Sure, Millennials will make up more than half of the workforce in just a few years, but Generation X and younger Boomers still provide invaluable experience and will remain a significant portion of the workforce, points out JLL. Designing spaces and strategies that cater to all generations’ preferences and work styles will foster a sustainable and innovative workplace.
That said, just as Boomers caused fundamental changes to society, Millennials are expected to follow suit. While Millennials have flocked to cities as they come of age, in time many will settle down, start families and adopt the suburban lifestyle, says JLL. That’s why tech companies must examine the long-term consequences of where they choose to locate.
Amber Schiada, senior vice president and director of Technology Research, JLL, remarked:
As tech companies expand, it’s important that they don’t count out the suburbs quite yet. Millennials will need housing within their budget, and will want to ease their work-life balance. Tech companies of all shapes and sizes can make the right real estate decisions by carefully considering emerging economic, educational and real estate trends.
To learn more about the trends impacting real estate decisions for US tech companies, download JLL’s Tech Office Trends 2017 report. View JLL’s Technology Fit Out Guide to learn more about the costs of building out a new technology office space.