JLL Reports Rising Rents and Industry Expansion Push Technology Firms To Key Growth Markets

Julia Georgules

PHOENIX, AZ,  Dec. 28, 2015 – According to JLL’s 2015 United States Technology Office Outlook, technology firms and startups aren’t just exploring new U.S. markets, they’re starting to plant roots.

Over the past year, 73 percent of the sector’s office leases represented occupancy growth. 

With Northern California holding nine of the top 15 most expensive in-demand technology submarkets—led by Downtown Palo Alto at $98.68 per square foot—tech firms are looking to other zip codes to fuel their future.

Expansion for the technology industry in 2015 is no longer just about the convenience of cheaper rents or accessing new talent pools. It’s a strategic necessity.

“Technology companies and startups need to look at a full range of options as part of their location strategy,” said Steffen Kammerer, leader of JLL’s Technology Practice group. “These companies have to grow.

“They can still hold a headquarters in the Bay Area, but their offices in secondary or tertiary markets can sometimes support larger staffs or hold just as much strategic importance to their business plans. We’re seeing this now more than ever.”

Fortunately, according to JLL’s report, the same economic forces that are pushing rents higher along familiar Northern California streets like Sand Hill Road and Hamilton Avenue—which at $141.60 and $124.44 per square foot respectably are the most expensive in the United States—are making it possible for the sector to spread the wealth into markets like Atlanta, Detroit, Orlando and Phoenix.

 In the past year, 34 technology companies expanded into new locations across 19 markets with more than 2.1 million square feet of office space.

Steffen Kammerer

“Other markets are not competing against Silicon Valley. They’re competing to be more like Silicon Valley,” said Julia Georgules, Director of U.S. Office Research for JLL. “Technology has become so pervasive in business that it’s now becoming a part of every industry and every market.

“This is generating a new momentum and energy in smaller markets and making them attractive to the type of talent that the technology industry is recruiting. It’s not necessary to be located in San Francisco or Silicon Valley anymore as a result, although you’ll still find great opportunity in those markets.”

Venture capitalists are even casting a wider net across the United States. Last year, 75.8 percent of unicorn companies were located in San Francisco and Silicon Valley; however, that number has shrunk to 59.2 percent with a remaining share in Utah, Oakland-East Bay, Boston, Washington, D.C. and Orange County.

 For a complete copy of the company’s news release, please contact:

Stacey Hershauer

focusAZ

Marketing & Public Relations

(480) 600-0195

www.focusaz.com