If you’ve been following the tech boom in recent years, you may have noticed a trend: tech companies are real estate’s #1 office customer, and as we rely more and more on the innovations coming out of these offices, we can reasonably say that this is no bubble. Rather, it represents a complete shift in the way we do business.
With this in mind, JLL’s 7th Tech Office Trends report combines employment and real estate data to highlight some of the biggest topics that are impacting the real estate decisions of technology companies across the country.
To start, secondary markets are poised to see more activity in the coming years: currently, tech accounts for nearly 20% of leasing in the Philadelphia market with plenty of room to grow. Such regions often make for affordable tech hubs and boast a healthy talent pipeline that can offer an edge over larger markets with constrained supplies.
Fit-out costs for a tech office space run about $184.43 PSF in Philadelphia, with an average tenant improvement allowance of $50 PSF and $134.43 PSF paid out-of-pocket. While the premium for a Philadelphia tech fit-out is 7.2% over the national average of $168.91 PSF, it is quite affordable in respect to size and what it offers. Compared to the ten largest U.S. metros, Philadelphia boasts the third lowest median home price and the second lowest average office cost.
Another area where Philadelphia shows promise is its strong talent pool. Pennsylvania offers a mix of private and state schools focused on tech and innovation, and while the State College area leads the state, Greater Philadelphia boasts more than 100 colleges and universities in its own right. Currently, 36.7% of its population holds at least a Bachelor’s degree, with more than one fifth of these degrees in STEM fields. Finally, with a millennial population of 27.4%,Philadelphia’s young educated workforce will likely be a selling point for companies going forward.
While we still have a long way to go as a tech market, Philadelphia’s potential looks promising: our market enjoyed some of the greatest absolute gains in employees in 2016, adding more than 4,100 employees in this one-year period. Today, more than 95,260 professionals are employed in tech occupations, and with companies like Comcast creating many more jobs, the future’s looking bright for Philadelphia.
For more information, visit JLL’s TechSpec page.