Fast-growing AI technology companies will help drive U.S. office leasing activity in 2023

The tech industry regained the highest share of U.S. office leasing in the third quarter of 2023 after relinquishing the top spot in the first quarter of 2022, according to CBRE’s new annual Tech-30 report. . Total high-tech rentals have recovered from low levels earlier this year, but are still well below the same period last year. Pandemic-era leases.

Now in its 12th year, the report measures the impact of high-tech industries on office demand and rents in 30 major high-tech markets and some high-tech submarkets in the United States and Canada.

Even as overall office leasing activity in the U.S. has declined, tech companies have increased their share of total office leasing activity every quarter this year. 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.

This report features new analysis of the correlation between venture capital (VC) funding and leasing activity by AI companies. The top five U.S. markets receiving VC funding across all sectors from H1 2019 to H1 2023 (San Francisco, Silicon Valley, New York, Boston, and Los Angeles/Orange County) had the most office leasing activity by AI companies. . According to an analysis of CBRE office leasing and CB Insights data, this period is:

Since 2019, AI companies have leased 7.5 million square feet of office space across the top five markets. San Francisco and Silicon Valley are the most active markets for AI leasing by volume, with over 2 million square feet leased each.

“Tech office leasing has been steadily increasing this year, but short-term momentum may change with the economy.Certainly, the long-term growth prospects for the technology industry remain strong as it funds innovation. remains strong with sufficient funding,” said Colin Jascoci. Executive Director of CBRE’s Tech Insights Center in San Francisco. “Investing in emerging technologies like artificial intelligence can create significant economic value, jobs and demand for office space. AI’s impact on business growth could reach the same scale as mobile internet. , which will result in a huge demand in the technology industry.” 30 markets. ”

Even though high-tech software and services job growth fell 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.

New York State created the most jobs (28,166) in tech in 2021 and 2022, with a growth rate of 17.2%, faster than the national rate of 10.1%, according to the latest data from the U.S. Bureau of Labor Statistics. . From 2021 to 2022, job growth was flat or accelerated in 19 markets, including Austin, Denver, Salt Lake City, Charlotte and New York. The fastest growing tech jobs from 2021 to 2022 were Vancouver (26.3%), Austin (26.1%), and Denver (23.7%).

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