LA, Orange counties rank among the…
LA, Orange counties rank among the nation's fastest-growing tech markets
A new report from CBRE ranks the greater Los Angeles area and Orange County among the fastest-growing tech markets in the nation. L.A. ranked 11th in technology job growth and Orange County ranked 15th.
By Kevin Smith | kvsmith@scng.com | San Gabriel Valley Tribune
The greater Los Angeles area and Orange County are among the fastest-growing tech markets in the nation, according to a new CBRE report.
The company's annual Tech-30 report measures the industry's impact on office rents in the 30 leading technology markets in the U.S. and Canada.
The L.A. region ranked 11th nationwide in tech job growth with a 13.4% gain, or 10,000 new jobs, during 2017 and 2018. That accounted for 84.5% of all new tech office jobs in the region added during that period.
Since the current high-tech growth cycle began in 2010, tech firms in greater L.A. have grown their workforce by 60 percent, or 32,000 jobs, the report said.
L.A. ranked ninth in office market rent growth, with an 11.1% increase in the second quarter of 2019 compared with the second quarter of 2017. It posted the same percentage gain between the second quarters of 2017 and 2015.
Low vacancies have hiked office rents
Westside landlords, including those in Santa Monica, saw the county's lowest vacancies in the third quarter of this year since the end of 2016, CBRE's report said, pushing average asking rents in Santa Monica up 80 percent from the end of 2010.
Chris Penrose, a senior vice president at CBRE, expanded on that.
"Tech, media and other creative companies often prefer character buildings that might have a great story and feel but require a good amount of renovation to bring them up to today's standards," he said. "That, in turn, can drive up rates significantly as these fully refurbished, hard-to-replace properties command a substantial premium over more standard office space."
The increasing merger of entertainment and technology has played a significant role in L.A.'s office scene, Penrose said, particularly in popular submarkets that include the West Side, Culver City, Hollywood and Burbank.
"Space is being gobbled up, and new, strategically located developments get leased before completion," he said.
Scopely, an interactive entertainment company and mobile-games publisher, is a prime example. In April, the company announced it would be leasing 60,000 square feet of space in Culver City, a move that will more than double its Los Angeles footprint by 2020.
And Apple expects to grow its job base in Culver City to more than 1,000 by 2022, and Google has leased a 584,000-square-foot office in West L.A. that is set to be completed in 2022.
OC ranked 15th in tech job growth
Orange County ranked 15th in tech employment growth, with a 10.9% gain during 2017 and 2018. That equated to 3,909 jobs added and accounted for more than 20% of all new office jobs.
The county ranked 13th in office rent growth with a 9.5% bump between the second quarter of 2017 and the second quarter of 2019. That landed well below the 23.3% increase seen between the second quarters of 2015 and 2017.
Orange County wasn't the only area to experience a slowdown.
"While leasing activity remains steady, rent growth slowed in some office markets," the report said. "This trend is most apparent in large markets where there is a lower concentration of tech companies, such as Dallas/Fort Worth, Orange County and Atlanta."
Those regions have seen slower high-tech hiring, primarily because of talent constraints rather than a lack of job openings, the study said.
Still, Orange County is home to a variety of tech firms, including Alteryx, a self-service data analytics company, and Cie, a tech startup that serves as an innovation lab for global brands. Cylance, a startup recently acquired by Blackberry for $1.4 billion, has also leased space in at 400 Spectrum Center in Irvine. The company uses artificial intelligence and sophisticated algorithms to thwart cyber attacks.
Vancouver was ranked the top Tech-30 market for high-tech job growth over the past two years, bumping Seattle from the top spot. Vancouver's high-tech job base grew nearly 30% and its average asking rent increased 9%.
San Francisco ranked second, with an increase of 25%, followed by Toronto (24%) and Seattle (24%). Those cities saw office rent increases of 18%, 9% and 12%, respectively.
CBRE forecasts high-tech job growth above the national average in the year ahead, but slower than in years past due to tight labor market conditions.
Kevin Smith handles business news and editing for the Southern California News Group, which includes 11 newspapers, websites and social media channels. He covers everything from employment, technology and housing to retail, corporate mergers and business-based apps. Kevin often writes stories that highlight the local impact of trends occurring nationwide. And the focus is always to shed light on why those issues matter to readers in Southern California.
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