A report released by real estate services and investment firm CBRE Group this fall named Philadelphia as one of the cities leading in the tech industry’s impact on office rents for 2019.
Out of the 30 leading tech markets in North America, Philadelphia’s tech industry increased in office market rent growth by 9.6% since 2017.
One of the city’s “submarkets” — a concentrated tech hub — is the University City neighborhood, which accounted for 4.7% of that growth, the report said. The city’s average asking rent was $29.46 per square foot in 2019, with a vacancy rate of 13.9%, while University City specifically had an average of $39.02 per square foot for the year, with a vacancy rate of 10.6%. (For comparison: Real estate research firm JLL found that during the third quarter of 2018, entrepreneurs in Philly’s Central Business District paid an average of $31.64 per square foot of office space.)
Philly saw high-tech employment slip by 2.1% during the last two years, but the city is home to a tech labor pool of about 109,000, and graduated more than 4,800 new tech degree holders in 2017, CBRE said.
“Philadelphia’s cost effectiveness and available talent pool are two of the most important drivers for tech company demand,” said Rija Beares, first VP of CBRE. “Additionally, Philadelphia offers a world-class culture and social scene that is ripe for attracting a tech company from another region looking to expand and diversify its talent base.” (Even so, we only rank 22nd in tech talent attraction and growth among the top 50 U.S. and Canadian markets.)
Overall, the report said, tech continues to be a strong and quickly growing industry in North America. Since 2010, the U.S. has added 1.4 million tech jobs, three times faster than the employment growth rate than any other industry.
And when it comes to the types of tech jobs Philly is adding, CBRE said telecomms companies (such as Comcast) were expected to add about 4,000 jobs in the near future. The report also identified the Spring Arts neighborhood as a cost-effective rent option for growing tech companies.