Report says tech sector is good for commercial real estate markets

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When it comes to the high-tech growth economy, hubs like Washington, D.C., are emerging, and they’re good for the commercial real estate market, according to a report from Jones Lang LaSalle.

The commercial real estate firm’s national ranking of top cities for high-tech companies shows the impact of the evolving startup culture on office demand, traditional workplace environments and regional economies.

The report, released Thursday, ranks the top 12 high-tech markets as San Francisco, Silicon Valley, San Francisco Peninsula, Seattle, Boston, Austin, Washington, D.C., Atlanta, Raleigh-Durham, Denver, New York City (Manhattan) and New Jersey.

JLL’s index rates each city on four primary factors: high-tech employment; share of U.S. venture capital funding; intellectual capital and innovation.  As a result, the top five markets include longstanding high-technology industry meccas. After that, though, the list gets interesting, with New York just outside the top 10, outranked by emerging clusters in Washington, D.C, Atlanta, Raleigh-Durham and Denver.

The report says that for every new innovation job created in a community, five additional jobs are created in the same metropolitan area. With high-tech incubators providing centers for these clusters to thrive, an increasing number of U.S. cities are relying on the high-tech sector for economic growth.  In fact, the sector has not only stimulated real estate recovery and expansion, but is helping to drive new construction.

The top 12 markets tracked in JLL’s report account for almost 50 percent of new construction – more than 23 million square feet.

"Given sequestration and continued political gridlock, Washington, D.C. 's emerging high-tech industry has helped offset the slowdown in leasing activity we've seen from federal agencies and government contractors," Scott Homa, vice president of research for JLL, said in a statement. "We expect the continued expansion of tech incubator spaces, new startup companies and growth of existing high-tech businesses across the city to boost tenant demand in the future, as the market evolves and works to break its dependence on federal spending."

Washington, D.C., is home to 1776, which allows early-stage tech companies with little capital to lease a spot at a conference table, a desk area or a small office for anywhere from a few months to a few years. As companies grow and expand, they have the flexibility to add more space without the expense of an independent office.

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