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West
Million
78
WY
WA
UT
OR
NM
NV
MT
ID
HI
CO
CA
AZ
AK
South
125
WV
VA
TN
SC
OK
NC
MS
MD
LA
KY
GA
FL
DE
AR
AL
TX
Midwest
68
WI
SD
OH
ND
NE
MN
MI
IN
IA
IL
MO
KS
Northeast
56
RI
VT
PA
NY
NJ
NH
ME
MA
CT
New York
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Boston
Washington DC Metro/VA
Salt Lake City
Chicago
Los Angeles
Austin
Seattle
San Francisco
Silicon Valley
Denver
San Diego
Atlanta
Toronto
Vancouver
BOSTON
CHICAGO
DENVER
LOS ANGELES
NEW YORK CITY
SALT LAKE CITY
SAN DIEGO
SAN FRANCISCO
SEATTLE
SILICON VALLEY
TORONTO
VANCOUVER
WASHINGTON DC METRO/VA
EXPLORE
Tech
IN THE 16 HOTTEST CITIES
Our interactive map highlights sixteen North American markets that are influenced by leading technology companies and their employees. This in-depth look provides insights and perspectives into what metrics are driving a shift towards more creative and robust local landscapes.
Newmark Research
Matt Davidson
San Mateo
Powered By The Technology & INNOVATION Practice Group
Highlights
matt.davidson@ngkf.com
Managing Director
All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of Newmark. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient may make in response to this publication, and should consult with professionals of the recipient's choice with regard to all aspects of that decision, including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of Newmark, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains. This document is intended for informational purposes only and none of the content is intended to advise or otherwise recommend a specific strategy. It is not to be relied upon in any way to predict market movement, investment in securities, transactions, investment strategies or any other matter.
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AUSTIN
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Washington DC Metro
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Toronto, Canada
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Vancouver, CaNada
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Miami
MIAMI
Gregory Katz
gkatz@ngkf.com
New York City
Average Asking Rent % Change from 1Q20
Overall Availability Rate 1Q21
Total Available Sublease Space (SF)
(Additional 2.3 MSF coming to the market)
2020 Office Leasing Absorption
Notable 2021 Tech Leases
IBM
400K SF
Apple
300K SF
DataDog
250K SF
Notable Active Requirements
Top Tech Submarkets
Far West Side
Chelsea
Hudson Square/Meatpacking
Madison/Union Square
Midtown South (East Side)
Long Island City
Top Life Science Submarkets
4 Local Market Macro Tech Points
116K SF
CashApp
40K SF
Splice
38K SF
Total FAANG Office Occupancy
Manhattan
$4.3B
VC Funding – Tech
13.3 MSF
15.1 MSF
NYC
Total Coworking Occupancy
12.8 MSF
40%
11%
19%
30%
1
Tech companies, including several FAANGs, compose 5.7 million square feet, or 25.1%, of the 22.5 million square feet actively searching for space in the market.
2
Since the start of 2017, the Penn District and Far West Side have seen 5.7 million square feet of leasing activity, more than in any other area of Manhattan. Facebook and Amazon have multiple offices in these submarkets.
3
4
After Facebook signed the largest deal in Manhattan last year, notable recent tech deals include Apple’s expansion at 11 Penn Plaza and Square’s lease of an entire building in Soho.
Since the first quarter of 2008, tech employment in the New York MSA has increased by 74.5% to nearly 275,000 jobs.
Tech Employment
263,210
Tech Employment 1-Year Change
+8.7%
5.2%
NYC MSA
Average Tech Wages
$184,156
Average Tech Wage 1-Year Change
+6.3%
+5.8%
..................................
$74.06
1Q21 Average Asking Rent
-7.7%
17.3%
21.9
-20.8
MSF
11.8%
Overall Availability Rate 1Q20
(12.4% in July)
-17.0%
Net Effective Rent % Change from 1Q20
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Sources: Newmark Research, Chumura/JobsEQ, PWC MoneyTree, HR Tech Group
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Statements in this document regarding Newmark that are not historical facts are “forward-looking statements” that involve risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements. Except as required by law, Newmark undertakes no obligation to update any forward-looking statements. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Newmark’s Securities and Exchange Commission filings, including, but not limited to, the risk factors and Special Note on Forward-Looking Information set forth in these filings and any updates to such risk factors and Special Note on Forward-Looking Information contained in subsequent reports on Form 10-K, Form 10-Q or Form 8-K.
Discussion of Forward-Looking Statements about Newmark
-9.6
2021 Office Leasing Absorption (Year to Date)
$145,247
130,965
FuboTV
55K SF
Seaport
Downtown
Back Bay
East Cambridge
Cambridge
– Biotech/life science remains a bright spot amidst the current pandemic and subsequent recession. Positive fundamentals, strong venture funding and public markets, etc. are driving this segment of the marketplace. – Layoffs in consumer-facing tech companies is a key driver behind the market’s rising sublease inventory. TAMI accounts for more than 35% of available subleases Downtown and 42% of available sublease in Cambridge. – Tech tenants with impending lease expirations are willing to let them expire without c committing to a new lease. Work-from-home policies have been sufficient or successful enough to allow these users to wait until 2021 or for a vaccine before going back out into the market again. – While there are fewer tenants in the market, TAMI tenants still account for roughly 25% of all requirements Downtown.
Amazon - 1 Boston Wharf Rd in the Seaport
630K SF
Quickbase - Atlantic Wharf
41.4K SF
Drizly - 501 Boylston St
30.6K SF
$8.2B
2.9 MSF
1.7 MSF
While TAMI tenants continue to account for an above-average share of sublease availabilities, the pace of growing inventories has slowed in recent months.
Since January of 2020, TAMI tenants have accounted for 51% of sublease transactions on a SF basis. Tech tenants are looking for shorter terms/flexibility as well as low capital output in focusing on subleases.
Some tech companies are downsizing their footprints – LogMeIn, Quickbase, Cayan, etc.
Big tech is moving forward with new and planned office requirements. Amazon’s recent expansion in the Seaport is the most recent example.
145,921
+5.1%
$153,988
+4.3%
...........................................
West – Route 128
Lexington & Waltham
$38.67
Average Asking Rent 1Q21
+2.6%
-14.3%
20.2%
19.7%
8.3
-4.1
-1.2
3 Tech Tenants Expanding or with Current Requirement
Cambridge Associates
SimpliSafe
Pegasystems
Relativity
AT&T
150K SF
100K SF
Tech tenants Expanding or with Current Requirement
Fulton Market
River North
West Loop
North
The South Loop
2 Local Market Macro Tech Points
$244M
3.3 MSF
Total Coworking occupancy
1.0 MSF
Google adding 250,000 SF and 2,000 jobs in Chicago.
Total venture funding by Chicago companies reached $2 billion in the first quarter, according to PitchBook and the National Venture Capital Association. That’s nearly twice the $1.1 billion raised in the fourth quarter of 2020.
108,727
+2.1%
$109,274
+3.1%
Lincoln Yards
$38.34
+2.2%
18.4%
16.8%
6.2
-188
KSF
-992
denver
Workday
80K SF
Xingular
50K SF
Galileo(SOFI)
Tech Tenants Expanding or with Current Requirement
Utah County North
Draper Tech Corridor
Southtowne
155K SF
Extra Space Storage
91K SF
$169M
869 K
53k; 1.5 MSF (Includes mostly data centers)
Silicon Slopes showing strong tenant touring activity in Q1.
Pick up in tenant inquiries from West Coast Technology Companies.
Utah’s mask mandate ended on April 10th.
Sublease absorption activity will pick up significantly in Q2.
33,826
+5.9%
$97,455
+6.8%
$22.73
+8.4%
+10.6%
17.2%
12.2%
2.3
Salt Lake CBD
Domo
-400
-100
Reston
Herndon
Crystal City/Pentagon City (National Landing)
6 Local Market Macro Tech Points
Tik Tok
40 SF
Motley Fool
70K SF
Cisco
$196M
2.4 MSF in the District
2.1 MSF
Overall demand remains low due to uncertainty of Covid19 and reentry across DC, MD and VA.
DC is struggling and has hit an all-time high vacancy rate for the CBD (Central Business District) Submarket – approaching 17%.
Major tech companies remain bullish – Microsoft leased a total of 600K in 2020 in Northern VA, Facebook looking for expansion in DC.
270 corridor in MD is very hot market due to the biotech companies expanding and looking for lab space. Lab space is a hot commodity with very few options.
208,558
$128,540
+3.7%
$41.15
2.7%
21.9%
19.9%
8.8
-3.3
East End
Tysons
I-270 Corridor
Urbana & Route 85
Riverside Research Park
Downtown Baltimore
4.1 MSF in the Washington metro area
washington dc metro
-700
5
6
Amazon still moving forward with HQ2 and redevelopment in Arlington.
Industrial markets and data centers continue to expand in Western parts of Northern VA and remain two of the hottest sectors in the region.
atlanta
Activision
Amazon
Roku
Beyond Meat - South Bay: ELS/Beach Cities
281K SF
Facebook - West LA: Playa Vista
51K SF
Rubicon - West LA: Culver City
$571M
5.1 MSF
4.3 MSF
Tech and media lead other industries in active sublease listings.
VC funding reached $9.1 billion in 2020, a new high.
Demand for studio space and offices to support post-production work is growing; new construction is on the horizon.
FAANG occupiers remain in expansion mode, and while the focus is mostly West LA, Burbank has seen increased interest.
137,967
+5.5%
$126,437
+4.7%
$44.14
Average Asking Rent 1q21
+4.6%
-13.5%
22.5%
-4.8
9.1
Santa Monica
Playa Vista
Culver City
Hollywood
Thousand Oaks
San Gabriel Valley
LA Bioscience Corridor
Westside
Burbank
The full reopening of filming in the region will jumpstart leasing from smaller tech-media companies.
Propagate Content - West LA; Century City
22K SF
Belkin - South Bay: ELS/Beach Cities
65K SF
5 Local Market Macro Tech Points
GetUpside
10K SF
Polycom
89K SF
Blackbaud
42K SF
$956M
7.5 MSF
Facebook, Google, Indeed, and Apple all intend to come back to the office. All have continued large-scale developments or build-out projects currently underway.
More VC and PE firms are relocating to Austin as they look to drive significantly more dollars into the Austin start-up scene. This should continue to help fuel growth in the metro from both the perspective of added jobs and the demand for office space.
In addition to Tesla, the eastside of the Austin metro already contains a very significant presence of Samsung and Applied Materials, both at over 2 million square feet and growing. Amazon has a 3.8 million square foot facility under construction in the area, and there are rumors circulating that all of Elon Musk’s companies (The Boring Company, Neuralink, Space X) will soon have a presence in the area.
Tesla land assemblage (now ~3,000 acres), and subsequent development of their Texas gig-factory has led to an exponential increase in demand on the east side of the Austin metro. This demand consists of primarily industrial, single-family, and multi-family uses, but significant office demand will soon follow as roof-tops and resident counts increase.
65,463
+9.7%
$126,329
+2.0%
$36.39
0.44%
22.7%
15.3%
3.57
CBD
North/Domain
Northwest
-1.99
-391
·Austin continues to be the beneficiary of relocations from the coasts. As of the end of March 2021, Austin had already seen 13 corporate HQ relocations. 2020 was the Austin metro’s best year ever in terms of new jobs and relocation jobs announced, at over 12,000, primarily driven by Tesla and their 5,000 announced jobs.
Veeam Software
20K SF
Facebook
800K - 1M SF
W20 Group
15K SF
3 Local Market Macro Tech Points
Wizards of the Coast - Bellevue
32K SF
$218M
2.8 MSF
20.8 MSF
Big Tech from outside the region is touring for secondary offices again. Four requirements from this past quarter over 30,000 feet with occupancy goals of 2021.
Seattle’s market has become increasingly “tenant friendly” as large blocks of high quality, plug and play space drive the market.
Bellevue is the hottest region in the country driven primarily by Amazon’s expansion to pre-lease development projects in the CBD. Google & Facebook have also been drivers committed to additional space through the past 12 months.
211,291
+11.1%
$210,583
+2.7%
$41.97
2%
15.9%
10.1%
-898
6.76
500K SF
Seattle CBD
Lake Union
Bellevue CBD
Bothell
REI - Bellevue suburb, Issaquah
69K SF
Amazon - Bellevue
600K SF
-1.0
Chewy
30K SF
DoorDash
Undisclosed Fintech
Invitae
SiSense
3.6 MSF
Bay Area VC funding for Q1 2021 was 50% of total Bay Area VC funding for 2020 – which itself was a record year.
Salesforce announced a return to the office in May; Reddit is touring market with plans to double it’s footprint, despite announcing a permanent WFH policy.
Current tenant demand has increased and is now just 3% below the average tenant demand between 2015-2019.
Since large blocks of available space were such a precious commodity over the last couple years, several tech companies land-banked space for future growth. Some of this space has come back on the sublease market, such as Dropbox putting 36% of its new headquarters space on the market for sublease.
124,485
+8.3%
$224,131
+7.0%
$77.94
-10.6%
23.7%
11.3%
-7.66
9.03
SOMA
South Financial District
Mission Bay
3.0 MSF
52.0 MSF
Bay Area
$26B
(SF + SV)
-2.23
A few tenants have already pulled their sublease space from the market with plans to reoccupy this summer; rumors are more companies will soon follow.
Currently 14 Tech/Life Sciences tenants in the market with 100K+ sf requirements.
Twitter exercised renewal option for 200K sf
Square in the market for 200K sf for next-gen HQ
.....................................................................................................................................................................................
Amplitude pending 60K sf new lease
Sigma
54K SF
Figma
Corsair - Park Point, Milpitas
118K SF
Veeco - North San Jose
97K SF
Apple - Cupertino
58K SF
$14.1B
1.8 MSF
Tenant interest is beginning to pick back up in the first quarter of 2021. Proposals per week in 2021 are 50% higher than the average per week in 2020. 5 of the last 10 weeks have recorded most inquiries in a week since March 2020.
Tenant demand has increased by 124% since the second quarter of 2020. Tech companies currently make up 52% of all requirements.
Despite slow leasing velocity, office asking rates continue to rise, setting an all-time high in the first quarter of 2021. Average asking rates are now up to $4.81/SF.
Office sublease space is currently responsible for 23.85% of all office availability. This is up 1.8% from March 2020.
280,818
+8.1%
$274,554
+0.8%
$54.81
12.19%
9.24%
-2.5
2.57
San Jose
Mountain View
San Carlos
50.8 MSF
Sunnyvale
Redwood City
Palo Alto
-630
Sony
Marvell
Zoom
Red Canary
CPB Group
$194M
550K
Colorado business confidence is spiking at a rarely-seen rate as vaccinations increase and operating restrictions loosen. Business leaders rated their overall confidence at a level of 64.4 in a quarterly index released by the University of Colorado-Boulder Leeds School of Business. This nears the highest score in the 19 year history of the index.
Colorado leads the list of states with the most remote tech workers, at 8.6%.
The first quarter of 2021 saw near record levels of VC Funding activity within Colorado, totaling nearly $1.5 billion. While SAAS continues to lead all industries in total funding, Aerospace is one of the fastest growing verticals in the state.
Denver ranked #9 on the Top 100 Cities for Inbound Renter Migration.
66,649
+6.5%
$120,052
+6.2%
$28.63
-2.6%
24.8%
17.8%
-2.6
Downtown (LoDo/CPV, RiNo)
Boulder
Aurora
4.1
2.7 MSF
Palantir
Wix
Contentful
45K SF
Largest 2020 Tech Deals
Amazon | April-2020
Shopify | December-2019
Kabam | March-2020
1.4 MSF
Microsoft leased an additional 20,000 sf in the Downtown Vancouver submarket at its Center for Excellence announced its hiring of an additonal 500 employees. Further news reports indicate Microsoft will open an Azure Edge Zone in the downtown core.
Downtown Vancouver tenant demand is still subdued however the vacancy rate inclusive of sublease space sits at 6.6% indicative of a softer yet still landlord favoured market.
Construction of the new subway line connecting the Broadway Corridor/Mt. Pleasant to the broader Metro Vancouver market has begun. The City of Vancouver is currently reviewing the potential density upzone for the entire district.
Deal velocity/tenant demand continues in the burgeoning Mt. Pleasant district driven largely by digital media tenants (VFX/Animation/Post Production/Gaming).
44,000
$54,000
$60
+1.2%
-5.5%
9.8%
3.6%
-1.25
950 K
Downtown Vancouver
Yaletown
..........................................
Mt. Pleasant
1.6 MSF
Gastown
Broadway Corridor
$924M
AMAZON
Vancouver, Canada
ANIMAL LOGIC
PING IDENTITY
300 K
Notable Active Requirement
Fan Duel
66K SF
33K SF
$128M
2.0 MSF
674K SF
Improved Urban Infrastructure: The Atlanta BeltLine is a 22-mile loop of trails and transit through 45 neighborhoods. Its goal is to create a more sustainable and equitable Atlanta through urban revitalization that connects the city, increases economic opportunity and improves the quality of life for all.
Microsoft has acquired 90 acres on the westside of Atlanta with intentions to employ up to 15,000.
Buildings located in State designated Opportunity Zones (OZ) may offset $3,500 per “new job” of the business’s Georgia Income Tax liability, with excess credit claimed against withholding taxes. Credit may be applied against 100 percent of any corporate income tax liability on the Georgia Income Tax Return; flow-through entities will be able to flow the credit through to the members, partners, or shareholders.
Apple/Southern Co is constructing a $50M – 50K SF campus for Atlanta HBCU campuses.
40,000
$126,000
$28.83
+1.8%
28.2%
23.0%
-2.1
5.7
Midtown
North Fulton
Central Perimeter
Midtown/Buckhead and North Fulton (Office)
Northeast/I-85 Corridor
Marietta/Kennesaw (Manufacturing)
Global Telecom
Source: beltline.org
-2.4
Active Requirements
196K SF
130K SF
ServiceNow
95K SF
$5.1B
863K SF
1.0M SF
UTC remains the preferred submarket for FAANG and other tech companies, due to its proximity to UC San Diego and its pipeline of engineering graduates.
Developers working on massive projects Downtown are trying to attract new tech and life science tenants to the area. Stockdale Capital is converting 750K SF of creative office space and IQHQ is building 1.6M SF of new life science space.
Apple and Amazon have been the most active tech companies in the market. Apple is recruiting from the region's deep talent pool in the wireless industry, while Amazon is expanding its engineering staff alongside its massive growth of more than 4.6M SF of new distribution facilities over the past two years.
Sublease availability remains elevated at 2.3M SF, compared to the pre-pandemic level of 1.5M SF, but has subsided from its peak of 2.5M SF.
+4.5%
$130,000
$38.69
+7.9%
+10.8
15.4%
-1.3
2.6
UTC
Sorrento Mesa
Rancho Bernardo
Torrey Pines
Sorrento Valley
san francisco
Zego
Clickup
200K SF
-0.5
1 Local Market Macro Tech Points
Amazon - 18 York St./120 Bremner Blvd.
120K SF
Twitter - 901 King St. W.
Wealthsimple - Old Shopify Space
35K SF
$1.3B
1.2 MSF
946K
Sublease space continues to increase across the Downtown Core and tech sector.
110,000
$55,000
$61.81
-3%–5%
7.2%
2.3%
2.8
Downtown West
Liberty Village
Financial Core
Discovery District
Pill Hill
Netflix - Canada HQ (between Vancouver and Toronto)
Facebook - Potentially 16 York St.
Pinterest - 85 Richmond St. W.
-742 K
Openstore | Wynwood – The Annex
5K SF
Shiftpixy | Brickell – 501 Brickell Key
13K SF
$292M
1.3 MSF
68K
50,508
$99,714
$39.92
17.0%
21.1%
433
882
NEW YORK
236
Millennium Management - Miami
80-100K SF
FinTech companies are moving to South Florida at a faster pace than tech firms – increasing investable funds creates an increase in start-ups or expansion of existing operations.
SoftBank launching a $100M ‘Miami Tech Fund for Miami based startups – bolstering existing Miami-based companies and attracting new talent/companies to Miami.
Miami Mayor Suarez has committed to a long-term rebrand to shift the perception of Miami as solely a vacation destination to a multi-faceted tech hub by being a business-friendly environment and responsive to the needs of the incoming tech companies.
Miami’s climate, diverse population and lack of state income tax attracting VC, Hedge Fund & PE leaders to the state acting as ambassadors for others to follow suit.
Technology industry job growth has increased 82% over past 8 years.
Many top universities rumored to be opening graduate program outposts in South Florida, specifically Miami, which will attract and retain necessary talent to bolster growth of tech and media operations in Miami.
Atomic Fund | Wynwood – The Annex
Tap Networks - Miami
Blocktower - Miami
6K SF