IRVINE, Calif. – June 8, 2017 – Orange County, California, has placed 20th within the top 25 U.S. tech cities, with San Jose (Silicon Valley) and San Francisco capturing the first and second spots respectively, according to Cushman & Wakefield’s inaugural “Tech Cities 1.0” national report launched today.
“Orange County’s technology sector is not only alive and well, it is thriving,” according to Chon Kantikovit, MCR.w, SLCR, LEED AP, a Managing Director with Cushman & Wakefield in Irvine, who specializes in tenant brokerage and the tech sector.
According to Deloitte Tech 500, in 2016 there were 14 Orange County-based technology companies among the fastest growing tech firms in North America, all with more than 100% revenue growth in the past year. Often referred to as Silicon Beach South, Orange County is home to well-known corporations such as Broadcom, Emulex, Conexant, Kingston Technologies, Toshiba American Informational Systems, and Western Digital, as well as to more recent startups such as Acorns, Blizzard Entertainment, CrowdStrike, Cylance, Kareo, and Mavenlink.
The top 25 tech cities were determined by analyzing the concentration of factors such as talent, capital, and growth opportunity – the key ingredients that comprise a tech stew. The heartiest of these tech epicenters are: 1. San Jose, CA (Silicon Valley); 2. San Francisco, CA; 3. Washington, DC; 4. Boston/Cambridge, MA; and 5. Raleigh/Durham/Chapel Hill, NC.
Cushman & Wakefield created the “Tech Cities 1.0” report to provide greater insight for its clients and industry stakeholders into existing and emerging tech centers that are driving much of today’s U.S. economy.
Ken McCarthy, Cushman & Wakefield’s New York-based Principal Economist and Applied Research Lead for the U.S., states that “tech is in everything” and that people would be left behind if they did not adopt technology and change with that technology.
“Basically every company today is a tech company in one way or another. We’re all using it, we’re using various aspects of tech companies to do various things,” Mr. McCarthy elaborated. “Whether it’s Salesforce as customer relationship management, or Workday for HR, and various other database programs, the old way of doing business just doesn’t work anymore.”
Report co-author and Regional Director, Northwest U.S. Research at Cushman & Wakefield, in San Francisco, Robert Sammons, said that while it was not surprising to see San Jose (Silicon Valley) and San Francisco continue to dominate, that mass-transit issues and escalating housing costs in those areas have fanned a tech spillover into secondary markets such as Austin (no. 7), Denver (no. 8), San Diego (no. 9), and Salt Lake City (no. 24).
There are several key local factors contributing to Orange County’s success as a top tech market in the U.S., according to Mr. Kantikovit and colleague Shawn Lawrence, a Director with Cushman & Wakefield’s Irvine office, including the area’s myriad tech industries, companies and tech-friendly commercial properties, various higher education programs helping to fuel the STEM (science, technology, engineering, math) engine, the unique tech hub working environment, and the ongoing efforts to provide live-work-play environments that attract workers.
“Specific segments of the startup technology sector that have performed well involve gaming, artificial intelligence, cybersecurity, Fintech, Healthtech, and Cleantech,” Mr. Kantikovit said. “The effects of business growth across each of these technology sectors is most visible in the Irvine Spectrum submarket, which has become widely regarded as the technology hub of the Orange County marketplace.”
Irvine Spectrum vacancy rates have plummeted from just over 20% in 2010 to under 6% at the close of First Quarter 2017. Furthermore, with construction starts running at a 10-year high and recent large expansion leases signed by Cylance (140,000 SF), Green Wave Technologies (23,000 SF), and Crown Castle (60,000 SF), the technology sector has not revealed any signs of slowing. Local technology expert group OCTANe is forecasting 22,000 new technology-related jobs and $1.8 billion in new value created in Orange County by 2025 in its 2017 Impact Report.
“Helping to fuel Orange County’s high-tech prowess is the continuing increase in STEM-related degrees awarded by Orange County universities such as University of California Irvine, Chapman University, Concordia University, California State University of Fullerton, and nine community colleges,” Mr. Lawrence added.
Over the last five years, the number of STEM-related undergraduate degrees granted has increased by 25%. And local universities have awarded 30% more graduate degrees in this same timeframe. Thirty-seven percent of Orange County residents over the age of 25 have a bachelor’s degree or higher, ranking Orange County as one of the top regions in the nation when it comes to college-educated residents, according to the Economic Development of Irvine.
“A unique advantage of Orange County’s technology environment is the diverse nature of high-tech manufacturing, small and large warehouse and distribution buildings, proximity to the Port of Long Beach, and an abundance of office space across all classes, ranging from high rises to R&D facilities,” states Mr. Lawrence. “An emerging trend in Orange County’s apartment scene is to surround Class A office product with large retail complexes and modern apartments. Submarkets such as South Coast Plaza, The Irvine Spectrum, Fashion Island, and Park Place are some of the newest areas that offer a live-work-play environment. Orange County is poised to continue robust growth in both traditional industries and the new frontier of technologies as they come online for the foreseeable future.”
These factors appear to be positively affecting Orange County’s ranking as an emerging tech city, positioning it as a growing force in relation to cities that have significant Tech reputations such as Seattle, New York, and Los Angeles.
Mr. Sammons cited Seattle’s cost-of-living as a lingering issue, somewhat mitigated by a recent uptick in residential development that’s outpacing San Francisco’s, as well as mass transit challenges.
“Seattle has played catchup over the past few years but with housing creation now outpacing that of the Bay Area and with a huge $54 billion transportation initiative that recently passed at the ballot box, it will likely allow it to compete much more aggressively with those markets at the very top of the list.”
“In the case of New York, when we started to see a growth in tech employment here about four or five years ago, one of the big issues for the companies coming to New York, particularly from San Francisco or Silicon Valley, was a lack of the skilled labor force they needed, particularly engineers,” Mr. McCarthy said.
In terms of Los Angeles, both Mr. McCarthy and Mr. Sammons noted its exceptionally diverse economy.
“Media is important, and you can’t lose sight of the fact that historically it’s also been an important manufacturing and industrial center,” Mr. McCarthy said, “There are myriad industries centered in LA, which has a good talent pool, and I would expect that also will come into play as we start to see these things evolve.”
For a copy of the Tech Cities 1.0 report visit Cushman & Wakefield here.
About Cushman & Wakefield
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