Tech job growth will accelerate in Denver in 2021 and 2022, according to CBRE’s annual Tech-30 report, which measures the impact of the tech industry on office demand and rents in 30 major tech markets in the U.S. and Canada. It outperformed all but two other markets.
Denver’s 23.7% increase in tech jobs in 2021 and 2022 easily outpaced the 16.4% increase in the previous two years. While Denver’s job growth outpaced all cities except Vancouver and Austin, the metro area had negative net office absorption growth over the past two years. Net absorption, a proxy for demand, measures the net amount of newly occupied space relative to newly vacated space. Only five of the top 30 tech markets experienced positive growth in office net absorption during the analyzed period (Q3 2021 to Q2 2023).
“The tech industry has been slow to return to offices, impacting places like Denver, where the tech industry was driving demand for office space heading into the pandemic. There is optimism that this job growth will translate into demand for offices in the future. We’re starting to see more stringent enforcement of this, which is likely to have a positive ripple effect for office markets that supply technology talent, like Denver,” said Ryan Link, Senior Vice President. . Partnering with CBRE’s Technology & Media practice in Denver.
Nationally, the share of high-tech companies in total office leasing activity increased every quarter this year, even as overall office leasing activity in the U.S. declined. The high-tech industry, which lost its lead in the first quarter of 2022, regained its position as the top sector for office leasing activity in the third quarter of 2023. The tech industry’s share of office leasing was 16.5% (7.3 million square feet) in the third quarter of 2023, up from 10%. In the fourth quarter of 2022, it was 9.3% (3.9 million square feet), the lowest level since the beginning of the year. The tech industry retreated ahead of the finance and insurance sector, which claimed a 15% share of office rental activity in the third quarter.
In Denver, tech companies’ share of total office leasing activity is less linear. At the beginning of the pandemic and into the first quarter of the pandemic, the tech industry was the leading sector of office leasing activity, accounting for 22.9% of all leasing activity from Q4 2019 to Q3 2021. In recent quarters, the tech industry has claimed to have been displaced by the business services and energy sectors. This represents only 12% of Denver’s total rental activity from Q4 2021 to Q3 2023.
Despite high-tech software and services job growth slowing from 3% in the second half of 2022 to 0.4% in the first half of 2023, total U.S. tech industry employment remains well above pre-pandemic levels. . According to CBRE, September 2023 had the fewest layoffs in the tech industry since June 2022. Data analysis of job search company Challenger, Gray & Christmas.
Denver’s technology workforce is 102,333 people, representing 19.7% of all office-based jobs in the city. Another growth driver: Tech companies received nearly two-thirds of the $782.3 million in venture capital funding awarded to Denver companies in the first half of this year.
“There is a strong correlation between venture capital funding and industry growth. The fact that investors have confidence in the ideas, innovation, and talent emanating from Denver confirms a bright future for technology in Colorado.” “It’s something,” Link added.
colorado springs
The report also highlights 10 high-tech markets to watch in the future, with Colorado Springs ranking third for the highest concentration of office jobs in high-tech industries. Almost 20% of the market’s office-based jobs are high-tech jobs.
“Colorado Springs has a high-skilled workforce, a desirable quality of life, and relatively low office rents compared to other technology hubs, making it a great location for the future,” said Jared May, vice president of CBRE in Colorado Springs. “This makes it a strong candidate for growth in the country’s technology industry.”
The average office rent in Colorado Springs was $21.09 per square foot per year as of Q2 2023. That compares to $32.11 in metropolitan Denver, $48.14 in Austin, and $73.59 in San Francisco.
Click here to read the Tech-30 report.
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