Which Job Is Growing
The Office Sector
More Than Any Other?


Mimi Nguyen

You probably guessed immediately, and most likely guessed correctly (so congratulations in advance). Technology-related jobs, particularly in computer and mathematics-oriented occupations, is the current champion of office leasing.

The report comes from Rebecca Rockey, Cushman & Wakefield’s economist and head of forecasting for the Americas. She is the lead author of a new Occupier Insights report on the impact of certain technology occupations on the office sector, and has recently been shared by National Real Estate Investor.

The average tech job will keep office leasing strong in certain markets over the next ten years, according to the report.

Current office leasing activity related to tech jobs stands at between 20 and 25 percent of all leasing activity. These jobs — particularly in computer and mathematics — are a subset of STEM (science, technology, engineering and mathematics).

At first glance, this may not appear newsworthy, but the rub lies within the contrast to the previous office cycle, when office leasing was driven mostly by new financial services and business analyst occupations.

STEM jobs are being created at a faster pace than other jobs.

Over the last seven years, one million new computer and mathematics occupations have been created. That brings the total to 4.1 million computing and 167,000 mathematics jobs in the United States currently. In fact, STEM jobs are being created at a faster pace than other jobs. Of the 10 STEM occupations, seven of the them are computer related, including programmer, network developers and designers.

Of these jobs, 85.4 percent of them are in industries that use office space. This makes it the largest occupational category driving growth in the office cycle’s current expansion.

However, what we used to consider typical — Silicon Valley, gamers and other technology-type concerns — are now being used in other industries. The result: increasing and intense competition among employers. Offices are going where the talent is — anywhere there are educated Millennials recently graduated with a tech-type degree.

With that said, where to find them? They’re more easily found in the cities with the most highly educated populations. More than 90 percent of those employed in computer occupations have earned at least a bachelor’s degree; more than 50 percent have a master’s degree or higher degree. In the U.S. population as a whole, 30 percent to 40 percent hold a four-year degree at the very least. However, the highest number of college-educated adults are Millennials — 35 percent hold at least a bachelor’s degree.

Among the cities attracting tech rock stars: Washington DC, thanks to its universities and the federal government’s ever-increasing need for tech talent. Baltimore, which is connected to DC through the Maryland Corridor, benefits from this as well.

The top ranking markets, according to CBRE’s Scoring Tech Talent:

  • San Francisco
  • Seattle
  • Washington, DC
  • Toronto
  • New York

Note that these markets are also top tech-degree-producing locations as well.

The fastest growing markets: Los Angeles and Ottawa. L.A. has top tech universities, but until recently not so many tech jobs to support all the graduates. However, corporations desperate for tech staff are relocating to Los Angeles, believing it to be an untapped market of tech talent.

Ottawa’s reason for success: it’s the seat of Canada’s national government, and it’s swallowing up tech grads due to expanding government-related tech industries.

Check out all the markets here.

The bigger players of this space — Facebook, Google and Microsoft — are expected to add 84,600 related computer and math jobs between 2016 and 2026. Professional and tech service industries are expected to add four times that number: 351,200. This is according to the U.S. Bureau of Labor Statistics.

Drilling down, tech firms are liking central business districts and urbanized suburban submarkets. Good examples: the South Lake Union district south of downtown Seattle, San Jose’s Santana Row and The Domain in Austin, Texas.

What’s helping to drive the growing demand for office space is the strongest new office construction happening in this current cycle. The risk: increased vacancy and increasing pressure on effective rents.

Because unemployment is currently at historic lows, “employers have to poach talent from other companies,” Rockey tells National Real Estate Investor. The game plan: using creative real estate space with amenities and locations that appeal to the young workforce. These days, that’s everything.

 

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Mimi Nguyen is executive vice president of underwriting at KBS.