Dallas-Fort Worth continues to be an attractive hub for tech companies to set up shop, according to a new report from CBRE.
The region’s continually expanding tech labor pool and rising millennial population, coupled with an affordable cost of living, makes it an attractive place to do business. Per CBRE, DFW’s employment of tech talent is the fifth largest in the country, amounting to 4.9 percent of the overall workforce. (The national average is 3.7 percent.)
That’s 179,570 workers in Dallas-Fort Worth alone.
“North Texas has caught the eye of many tech companies and it’s not difficult to see why,” Jeffrey Eiting, co-leader of CBRE‘s Tech & Media Practice in Dallas, said in a statement. “Dallas has solidified itself as a major tech employment hub with one of the largest tech labor pools in the country. Couple that with explosive growth over the last five years in tech degrees granted locally and you’ve got an economic engine that allows tech companies that are here to grow organically—and a tech labor force that is deep enough to accommodate the needs of the many companies looking to move or expand here.”
CBRE outlined the factors contributing to the region’s tech boom in its newly released Tech Talent Scorecard, which is part of its annual Scoring Tech Talent Report. Each year, the commercial real estate services and investment firm ranks 50 U.S. markets on their ability to attract and grow tech talent.
Scores are determined based on 13 metrics, including talent supply, growth, concentration, cost, completed tech degrees, industry outlook for job growth, and market outlook for both office and apartment rent cost growth. When combined, CBRE said the metrics are able to measure each market’s depth, vitality, and attractiveness to companies seeking tech talent and tech workers looking for employment.
Each metric is weighted based on its relation—and importance—to job creation and innovation. For instance, labor costs for tech talent are weighted more heavily than office rents considering companies tend to allocate more capital to labor than real estate.
This year’s top five markets for tech talent are the San Francisco Bay Area, Washington DC, Seattle, Toronto, and New York City.
Dallas-Fort Worth ranks No. 13 with a score of 55.7. But as Clay Vaughn, SVP and co-leader of CBRE’s Tech & Media Practice in Dallas, pointed out, the future of the region is very bright.
“Dallas is a top producer of tech talent and one of the largest tech talent markets in the country. We’re also more spread out, much less dependent on mass transit than other top tech markets and we’re known for our pro-business environment,” he said. “The combination of these factors positions DFW to continue to be a high growth market for tech companies.”
CBRE noted a few key areas that made the region stand out in its report.
For instance, the millennial population (those aged 22 to 36 years old) increased by 11.4 percent since 2013. That equates to 68,824 people.
That’s coupled with a large amount of tech graduates. DFW ranks eighth among large tech talent markets in the number of tech-degree completions. The region actually had around 5,000 more tech graduates than new tech jobs from 2015-2019, per CBRE.
The average annual apartment rent in DFW is 14.2 percent of the average tech talent wage, which CBRE said makes it an affordable place to live for workers.
In terms of operating a tech company, the region is the seventeenth most expensive in comparison to the top 50 markets. According to CBRE data, the average one-year cost for operating a 500-employee tech company that occupies 75,000 square feet in DFW amounts to $43.6 million.
The COVID impact
In its report, CBRE also outlines how tech jobs are positioned to weather the COVID-19 pandemic and subsequent shutdowns. Now more than ever, CBRE said, companies across all industries need the technical skills that this talent base offers.
“The tech talent and companies leading North America’s innovation have a unique opportunity to accelerate economic transformation and lead the next growth cycle by leveraging technology to empower businesses and individuals,” CBRE said. “Tech talent and labor strategies clearly will play an important role in fulfilling business and innovation objectives in the years ahead.”
It’s an industry that can withstand economic shocks. CBRE points out that in the 2008-2010 recession, tech talent employment declined by 0.5 percent while overall U.S. employment experienced a 5.5 percent drop.
That’s been seen with COVID-19 as well.
As the labor market is disrupted and new challenges develop, technology will continue to be key. CBRE notes a few sectors that rose in importance during the healthcare outbreak: e-commerce and logistics, streaming and cloud services, search and social media, devices and communications, sensors and artificial intelligence, and cybersecurity. Areas with growth potential include 5G, autonomous vehicles, and advanced robotics.
“We expect that most tech talent markets and professions will thrive after the pandemic subsides, and many that facilitate remote work and tech services such as e-commerce, social media and streaming services may have even greater growth opportunities accelerated by the COVID-19 disruption,” Colin Yasukochi, executive director of CBRE’s Tech Insights Center, said in a statement. “Markets that have strong innovation infrastructure—leading universities and high concentrations of tech jobs—will lead the next growth cycle.”
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