It’s not just Silicon Valley that forms the nucleus of the U.S. high-tech growth economy, but hubs such as Raleigh-Durham are emerging thanks to the burgeoning high-tech start-up culture. Jones Lang LaSalle’s (JLL) national ranking of top cities for high-tech companies shows the impact of the evolving start-up culture on Raleigh-Durham’s office demand, traditional workplace environment, and economy.
“Raleigh-Durham has jumped from number 16 on the national list to number nine,” explains Mehtab Randhawa, Raleigh-Durham Research Analyst. “That leap illustrates the impact that high-tech has had on our local economy, just within the last year. Our market’s growth is driven by start-ups, many of which are located in incubators offering office space, access to professional services, collaboration, and venture capital opportunities.”
New center of innovation: Raleigh-Durham
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 it is also helping drive new construction. The top 12 markets tracked in JLL’s report account for almost 50 percent, more than 23 million square feet of new construction. At number nine, Raleigh-Durham currently has a total of 300,000 square feet of office space under construction.
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 – but then the list gets interesting. New York is just outside the top ten, outranked by emerging clusters such as Raleigh-Durham.
Raleigh-Durham is climbing the list rapidly with a robust high-tech cluster located in proximity to a highly-skilled labor pool of GenX and Millennial high-tech professionals, where 41.5 percent of the population aged 25 and up has their Bachelor’s degree or higher.
“High-tech start-ups continue to flock to the Triangle-area in an effort to tap into the highly-skilled talent pool of employees here,” said Randhawa. “High-tech services jobs currently make up a 14.2 percent share of office jobs in the region. The presence of three major universities – Duke University in Durham, North Carolina State University in Raleigh, and The University of North Carolina in Chapel Hill – has helped create quality jobs in the region, driving economic growth.”
Incubators foster innovation in start-ups
Technology incubators have become the modern alternative to the suburban garages where Apple, Hewlett Packard, and other high-tech giants began. They have maintained the focus on disruptive technologies and added modern, flexible office space, amenities such as, furniture, networking, training and access to venture capital opportunities.
“Emergence of these new start-ups will not only be able to provide the requisite entrepreneurial and tech environment, but will help in recovery and expansion of the real estate sector,” Randhawa said. “Significant capital and labor investments by these firms will be crucial in changing the work culture and business climate of Raleigh-Durham.”
This post was provided by Jones Lang LaSalle, a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate.