With all the challenges in the economy, and all the layoff notices, it’s easy to assume that even the biggest tech corporations are grinding to a halt. But a pair of Savills reports show that is far from the case, and that even with all the noise there are US CRE markets that still can expect to do quite well.
The report Tech Cities: Five key trends for occupiers starts with the reminder of where tech employment currently sits. Is it down some? Yes. By a lot? Not so much, depending on where you are. Savills looked at the company reports of Meta, Amazon, Apple, Netflix, Alphabet, Microsoft, Tesla, Nvidia, and Advanced Micro Devices. Here’s the telling sentence: “In spite of recent layoffs, average headcounts remain 66% up on pre-pandemic levels among major tech companies.”
That’s because of the enormous amount of hiring these companies did during the pandemic. Even now, with this group, the number of employees is at least 50,000 higher than at the end of 2019. Granted, most tech companies are not giants and may not have geared up to as great a degree, but as the Wall Street Journal reported at the end of December 2022, more tech firms were hiring than laying off. Also, 79% of laid-off tech companies found a new job within three months of starting a search.
As even the big tech companies start to insist that workers come into the office at least part of the time, that means a lot of need for office space.
But where? In the Savills Tech Cities 2023, the company wrote, “US cities account for more than half of the top thirty” globally in high tech. The top US metro areas for high tech are San Francisco, New York, Silicon Valley, Los Angeles, Boston; Austin; Seattle; Washington, D.C.; San Diego, and Raleigh. Each city in the rankings were judged a number of factors, including the overall business environment, the tech environment taken separately, the city atmosphere and wellness, and the size and quality of the talent pool.
However, that is a general take on tech. The rankings shift, depending on the particular type of tech and the top 12 global cities for each, according to Savills. With ag tech and food tech, the top four are New York, San Francisco, Boston, and Silicon Valley, but then number five is Chicago. For climate tech and clean tech, the top US metros are Boston, San Francisco, Silicon Valley, Los Angeles, and Washington, D.C., with New York not mentioned and replaced by Seattle. Fintech leaders are New York, San Francisco, Silicon Valley, Los Angeles, Washington, D.C., Boston, Chicago, Miami, and Atlanta. Life Sciences and health tech: Boston, New York, Silicon Valley, San Francisco, Seattle, San Diego, and Philadelphia.
Deep tech — areas like AI, machine learning, nanotechnology, and big data — is highest in New York, San Francisco, Boston, Dallas, Silicon Valley, and Los Angeles. At the top of US media tech are a mix of traditional media and tech cities — New York, San Francisco, Los Angeles, and Atlanta — followed by Austin, Seattle, and San Diego. Finally, mobility tech taken as things like ridesharing, home delivery, and autonomous vehicles see the biggest practice in Silicon Valley, New York, San Francisco, Los Angeles, Austin, Dallas, and Detroit.