top tech cities: exploring demand, leasing growth, vc funding and more

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  • Technology

    Office

    Outlook

    United States

    2015

  • JLL TECHNOLOGY OFFICE OUTLOOK

    techs

    firmly planted roots

    as well as opportunities

    for branching out. In examining

    markets across

    the country for their

    attractiveness to the

    technology industry,

    we hope to showcase

    < 2 0 1 5 >

  • WHAT WE LEARNED < 2 0 1 5 >

    Proximity to a hub is not

    necessarily enough: Local

    markets with an existing tech

    cluster that are also more

    affordable than the Bay Area

    will likely experience

    accelerated industry growth

    as firms explore new markets

    for expansion.

    1. Secondary markets are

    quickly catching up:

    In 2015, roughly 60% of

    unicorn companies were

    located in San Francisco

    and Silicon Valley, down

    from almost 76% in 2014.

    2. Startup momentum will

    cost you:

    Markets with the greatest

    startup momentum,

    characterized by access to

    capital, innovation and top

    talent (such as New York,

    San Francisco and Silicon

    Valley), are also the most

    expensive.

    3.

  • EXAMINING 4 QUESTIONS < 2 0 1 5 >

    1. Where are companies leasing space and expanding?

    3. Where are venture capitalists placing their bets?

    4. What markets will become the next hotspots?

    2. Where is the real estate cost highest and where can you find both value and talent to

    grow your company?

  • JLL TECHNOLOGY OFFICE OUTLOOK < 2 0 1 5 >

    TECH is the elusive linchpin that

    separates the growing

    companies from those that

    are shrinking

  • JLL TECHNOLOGY OFFICE OUTLOOK < 2 0 1 5 >

    73% of technology

    leases

    represented

    occupancy

    growth

  • JLL TECHNOLOGY OFFICE OUTLOOK < 2 0 1 5 >

    Secondary and

    tertiary markets are

    looking much more

    attractive to both young and mature companies as

    industry saturation in the most

    mature tech hubs has created

    both competitive and costly

    leasing environments.

  • TOTAL TECH LEASING (S .F. ) (Q414 -Q315) < 2 0 1 5 >

    *Data reflects leasing activity from Q4 2014-Q3 2015 for leases 20,000 square feet and larger

    Source: JLL Research

    - - 11,141 45,621 75,100 98,946 101,539 115,251 117,115 124,734 146,616 169,132 192,921 199,409

    249,906 251,437

    303,047 322,664 343,224

    426,409 451,879 462,960 465,095 493,469

    546,965 899,413 923,339 938,378

    1,063,110 1,654,912

    1,807,057 2,175,629

    2,400,759 5,386,142

    0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000

    MiamiSalt Lake City

    RichmondCharlotteOrlandoHouston

    IndianapolisMinneapolis

    Suburban MarylandNorthern Virginia

    DetroitOrange County

    BaltimorePhoenix

    New JerseyDallas

    San DiegoLos Angeles

    DenverRaleigh-Durham

    PhiladelphiaPortland

    PittsburghSan Francisco Peninsula

    AtlantaChicago

    Washington, DCOakland-East Bay

    BostonSeattle-Bellevue

    AustinNew York

    San FranciscoSilicon Valley

  • JLL TECHNOLOGY OFFICE OUTLOOK < 2 0 1 5 >

    Demand toward creative space

    is intensifying not only among technology companies but throughout the office-using

    workforce and will

    begin to push rents

    at a faster rate.

  • TECH AS % OF LOCAL LEASING < 2 0 1 5 >

    *Data reflects share of local market leasing activity from Q4 2014-Q3 2015 for leases 20,000 square feet and larger

    Source: JLL Research

    0.0% 0.0%

    1.6% 2.9% 3.0% 3.3% 3.8%

    4.7% 5.8%

    8.4% 8.5% 8.8% 9.3% 9.8%

    10.6% 11.5% 11.6% 11.7%

    12.5% 13.3%

    14.6% 15.1%

    16.1% 17.5%

    18.4% 23.5%

    32.3% 34.0%

    38.6% 40.2%

    48.2% 66.2%

    70.7% 81.3%

    0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

    MiamiSalt Lake City

    RichmondNorthern Virginia

    HoustonCharlotte

    New JerseyMinneapolis

    DallasOrange County

    DenverPhiladelphiaLos AngelesIndianapolis

    PhoenixDetroit

    Suburban MarylandOrlandoChicago

    Washington, DCAtlanta

    BaltimoreNew York

    PittsburghPortland

    BostonSan Diego

    San Francisco PeninsulaRaleigh-Durham

    Oakland-East BaySeattle-Bellevue

    AustinSan FranciscoSilicon Valley

  • JLL TECHNOLOGY OFFICE OUTLOOK < 2 0 1 5 >

    Within the primary tech hubs the technology industrys

    saturation and fast

    growth has created

    highly competitive

    leasing conditions.

  • JLL TECHNOLOGY OFFICE OUTLOOK < 2 0 1 5 >

    With an average vacancy rate of 7.6% in the 15 most expensive tech submarkets,

    tech companies in need

    of those locations must be

    willing to pay.

  • MOST EXPENSIVE IN -DEMAND SUBMARKETS < 2 0 1 5 >

    Market Submarket Average asking rent

    (Q3 2015) 1. Silicon Valley Downtown Palo Alto $98.68 2. Silicon Valley Downtown Mountain View $87.53 3. San Francisco Mission Bay/China Basin $81.50

    4. New York Hudson Square $81.50

    5. New York SoHo $79.80 6. New York Gramercy Park $76.58 7. San Francisco Peninsula Menlo Park* $73.44 8. San Francisco South Financial District $68.61 9. San Francisco North Financial District $68.53

    10. Boston East Cambridge $67.21 11. San Francisco South of Market $66.07 12. Silicon Valley Cupertino $65.52 13. San Francisco Peninsula Redwood City $63.06 14. New York Greenwich Village $61.49 15. Los Angeles Santa Monica $59.75

    TOP 15

    *Excludes Sand Hill Road

  • JLL TECHNOLOGY OFFICE OUTLOOK < 2 0 1 5 >

    Does concentration of brand-name headquarter location present potential risk to

    the market or does it

    simply affirm its place

    as the epicenter of the

    technology industry?

  • NASDAQ COMPOSITE BY MARKET CAP < 2 0 1 5 >

    Mega $200b + Large $10-$200b Mid $2-$10bSmall $300m-$2b Micro $50-$300m Nano

  • JLL TECHNOLOGY OFFICE OUTLOOK < 2 0 1 5 >

    83% of the NASDAQ composite

    lies with just

    73 tech

    companies

  • # OF MEGA AND LARGE CAP TECH HQs < 2 0 1 5 >

    # of mega and large cap technology HQs Total market cap

    Silicon Valley 25 $2,151,240,300,303.46

    San Francisco Mid-Peninsula 4 $397,150,931,958.84

    Chicago 4 $79,506,967,555.90

    Boston 3 $89,782,814,898.36

    Northern New Jersey 3 $81,165,126,709.76

    San Francisco 3 $68,789,917,234.46

    New York 3 $42,055,691,881.64

    Stamford 2 $208,420,969,436.20

    San Diego 2 $144,263,755,709.21

    East Bay 2 $26,495,513,492.10

    Seattle 1 $366,762,291,334.80

    Dallas 1 $51,657,748,144.84

    Orange County 1 $23,412,831,364.80

    Kansas City 1 $19,105,214,519.04

    Milwaukee 1 $15,646,535,660.62

    Raleigh-Durham 1 $10,661,251,367.30

    International 16 $641,044,818,435.93

    All others 643 $895,466,673,458.15

    Grand Total 716 $5,312,629,353,465.43 Source: NASDAQ

  • JLL TECHNOLOGY OFFICE OUTLOOK < 2 0 1 5 >

    34 technology

    companies

    opened new

    locations across

    19 markets,

    expanding into a

    combined total of

    more than

    2.1 m.s.f. in markets like

    Atlanta, Detroit,

    Orlando and

    Phoenix.

  • JLL TECHNOLOGY OFFICE OUTLOOK < 2 0 1 5 >

    The number of

    unicorns in the industry has

    nearly tripled.

  • JLL TECHNOLOGY OFFICE OUTLOOK < 2 0 1 5 >

    The trend of tech growth

    in secondary

    markets is beginning to dispel the traditional mentality

    that startups need to locate to the

    Bay Area in order to have access

    to private capital.

  • VENTURE CAPITAL FUNDING ($ IN MILL IONS) < 2 0 1 5 >

    $5.00 $20.95 $24.65 $26.00

    $34.85 $69.01 $101.57 $108.78 $128.29 $140.85 $147.79 $158.97 $173.87 $201.29 $203.29 $209.35

    $279.19 $348.32 $377.34 $379.32 $412.17 $434.60 $459.40

    $500.97 $686.03

    $872.77 $946.20

    $2,084.54 $2,159.88 $2,561.03

    $5,313.10 $5,438.80

    $12,621.65

    OrlandoIndianapolis

    Las VegasPhoenix

    MiamiBaltimore

    DallasMinneapolis

    Suburban MDRaleigh-Durham

    PortlandPittsburgh, PA

    New JerseyBoulder

    PhiladelphiaWashington, DC

    San DiegoDenver

    Suburban VAEast BayChicagoAtlantaAustin

    Orange CountyFlorida (entire state)

    UtahSeattle

    San Francisco PeninsulaBoston

    Los AngelesNew York (region)

    Silicon ValleySan Francisco

    $3.90

    $17.80

    $19.50

    $38.50

    $39.10

    $51.90

    $59.20

    $77.50

    $92.10

    $104.10

    $109.80

    $117.90

    $121.20

    $141.70

    $176.30

    $264.40

    $321.00

    $340.80

    $359.10

    $372.50

    $429.90

    $437.50

    $457.10

    $592.60

    $738.10

    $862.10

    $1,258.30

    $1,411.60

    $2,699.30

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