High-tech job growth in Denver is set to accelerate in 2021 and 2022, outpacing all but two other markets in CBRE’s annual Tech-30 report, which tracks office demand among the 30 leading tech markets in the U.S. and Canada. and measures the impact of the tech industry on rents.
Denver’s 23.7% growth in high-tech jobs in 2021 and 2022 easily surpasses its previous two-year growth of 16.4%. While Denver’s job growth has outperformed all but Vancouver and Austin, the metro area has seen negative office net 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 had positive office net absorption growth over the analyzed period (Q3 2021 – Q2 2023).
“The tech sector has been slow to return to office space, and that has hurt places like Denver where the tech industry was leading demand for office space into the pandemic. The good news is that Denver has not only continued, but even accelerated, its ability to attract tech talent in recent years. It is expected that this job growth will translate into demand for office space in the future. We are just starting to see tech companies begin to more strictly enforce their return-to-office orders, and this is likely to have a positive impact on office markets serving tech talent like Denver,” Ryan. Link, senior vice president, said. with CBRE’s Technology and Media practice in Denver.
Nationally, tech’s share of total office leasing activity increased each quarter this year, even as overall U.S. office leasing activity declined. In Q3 2023, the tech industry regained its position as the top sector in office leasing activity after losing its lead in Q1 2022. Tech’s share in office leasing in Q3 2023 was 16.5% (7.3 million sq ft), up from 10%. -Year low of 9.3% (3.9 million sq ft) in Q4 2022. Tech overtook the finance and insurance sector, which claimed a 15% share in Q3 office leasing activity.
Tech’s share of total office leasing activity in Denver hasn’t been so linear. Tech was the leading sector for office leasing activity leading up to and during the early quarters of the pandemic, claiming 22.9% of all leasing activity from Q4 2019 to Q3 2021. Tech had lagged behind the business services and energy sectors in recent quarters, claiming just 12% of Denver’s total leasing activity from the fourth quarter of 2021 to the third quarter of 2023.
Total US tech industry employment remains well above pre-pandemic levels, even as tech software and services employment growth slowed from 3% in the first half of 2022 to 0.4% in the first half of 2023. According to CBRE, layoffs in the tech industry in September 2023 were the lowest since June 2022. Analysis of data from job search firm Challenger, Gray & Christmas.
Denver’s technology workforce of 102,333 people accounts for 19.7% of all office-use positions in the city. Another growth driver: Tech companies claimed 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 relationship between venture capital financing and industry growth. The fact that investors feel confident in the ideas, innovation and talent coming out of Denver is an endorsement of the bright future of tech in Colorado,” Link said.
The report also looked at the Next 10 tech markets, where Colorado Springs ranked third for the highest concentration of office employment in the high-tech industry. About 20% of office-use jobs in the market are in high technology.
Jared May, vice president of CBRE in Colorado Springs, said, “Colorado Springs’ large pool of highly skilled workers, desirable quality of life and relatively low office rents compared to other tech hubs make it a strong contender for future tech industry growth. Is.”
The average office rent in Colorado Springs was $21.09 per square foot annually through the second quarter of 2023, compared to $32.11 in metro Denver, $48.14 in Austin, and $73.59 in San Francisco.
Click here to read Tech-30 report.