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A new report from CBRE, a global commercial real estate and investment firm, found that Chicago is the 5th largest and 11th fastest growing tech market in the country.
The report, called “Scoring Tech Talent”, scored the 50 largest U.S. markets according to size of tech talent pools.The scores are based on 13 metrics the CBRE research team analyzed to determine and compare a given market’s competitive advantage and ability to draw talent and increase their pool of tech talent professionals.
The metrics were weighted based on relative importance to tech firms. For instance, the report weighed tech talent labor costs more heavily than office rents, since more money is devoted to salaries than to rent.
Chicago’s official score was 56.81, good for No. 13 overall. Topping the list, from No. 1 to No. 5, was Silicon Valley, at 76.91, Washington D.C., at 71.39, San Francisco, at 65.44, San Francisco Peninsula, at 65.13, and New York, at 64.41. Miami ranked last, with a score of 20.15.
The full report can be downloaded here. Below, we share some highlights, as well as insight from Chicago-based Brad Serot, an executive vice president with CBRE.
All about growth
When asked what Chicagoans should take away from the report, Serot said, “That it’s exciting — the amount and the level of growth that we’ve experienced when we look at our peer cities.”
And he is right. The growth is real. According to the report, Chicago’s tech talent pool in 2013 totaled 133,170 employed persons, good for a No. 11-ranked growth rate of 25.8 percent from 2010-2013. That tech talent total ranked No. 5 in the country, behind a top four of Washington D.C., New York, Dallas/Ft. Worth, and Silicon Valley.
[ibimage==46766==Original==none==self==ibimage_align-center]Source: U.S. Bureau of Labor Statistics, April 2014. (growth rate from 2010-2013, concentration relative to U.S.)
Perhaps something that aids such growth is that Chicago is in the middle of the pack when it comes to cost. According to the report, Chicago’s combined estimated one-year costs for a sample tech firm — defined as 500 employees at a 75,000 square foot facility — is $37,565,302. That figure combines averages for rent cost, tech talent wages, support non-tech wages, and management wages. The estimation ranks Chicago No. 25 out of 50 markets. Oklahoma City, Okla., at $30, 418,343 was the cheapest market. Silicon Valley was the most expensive, coming in at $54,491,098.
Furthermore, the average wage for tech occupations in Chicago in 2013 is $82,194. While that grew at a 1.4 percent rate from 2010 to 2013, that wage is 96 percent of the U.S. average, ranking No. 25 of the 50 largest U.S. markets. One might think the average wage would be higher, seeing as how Chicago’s employed tech talent is reportedly 1.07 percent of its total jobs, barely above the U.S. average of 1 percent and good for No. 33. However, cost of living puts things in perspective.
The average monthly apartment rent in Q4 last year was $1,372, good for 16th most expensive. The report found, though, the overall cost of living in Chicago was 99 percent of the U.S. average, which ranked No. 36 in the country.
Support from the community
Growth could stem from community support, as well. Indeed, Serot said Chicagoans should be encouraged by the support from the community and from Governor Bruce Rauner and Mayor Rahm Emanuel. Additionally, Brad said there is a lot money going into tech firms. In fact, Chicago tech firms had their best year of funding yet in 2014. According to our Chicago Startup Report, Chicago tech firms raised $1.6 billion last year.
Further support comes from local universities, Serot said. And he’s right. The Chicago metro area, which the CBRE report included Milwaukee in, had the sixth highest tech degree completions (5,009) of any region from 2009 - 2013. Since 2009, Northwestern University has ties to 179 VC-backed firms. The University of Illinois is connected to 121.
One blemish on Chicago’s scorecard is its reported 4.6 percent drop in the millennial population from 2009-2013 — a loss of 23,800 from a population of 2.7 million. That change was better than only two cities — Atlanta and Detroit — out of 23 cities the report defined as “large tech talent markets,” or those with more than 50,000 persons in their tech talent pools. The U.S. average in millennial population change by market from 2009-2013 was +3 percent.
Though Serot admitted there is a challenge for “recruiting and retaining the best and the brightest,” he said the move to Chicago of companies like Yelp, Uber, Motorola, Google and Salesforce brings employees to the city that help make up for lost millennials.
Support from such companies will generate excitement and help retain young minds going forward, Serot suggested, adding that Chicago is ultimately a great place for entrepreneurship.
“We still have work to do to be considered a serious player, but I think we have absolutely made some amazing strides,” Serot said. “We have top down support from the governor, from the mayor, from the Fortune 100 and 500 businesses in Chicago, from the universities and the venture capital community. So, I think that all avenues are hitting right now, and I think that it’s a really great time to be an entrepreneur in Chicago.”
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