As tech startups continue to hire new employees and move into newer, bigger spaces, the success of these companies is also influencing the landscape of the city’s real estate market.
The study, which looked at both job growth and office market rent growth, found that since 2012, high-tech has been one of the top three industries for leasing activity in the city. From 2012 to May 2015, high-tech companies in the city jumped from six percent to eight percent of all commercial tenants in the city, rising from 4.4 to 6.7 million square feet being used for tech offices.
Meanwhile, office market rent growth sits at just 6.2 percent (compared to markets like San Francisco, who saw an increase of over 30 percent).
Chicago’s development as a tech hub has slowed as it reaches full maturity. Though the city’s reported job growth is down about five percent since the last period of study, almost 80,000 workers are employed in Chicago’s tech industry today. The average labor cost for a software engineer came in at $90,393.
Asking price for rent in the city sits at $28.40 per square foot each year. Unsurprisingly, River North was named as the top submarket for tech companies in the city, though rent in that neighborhood averages $35.21 per square foot each year.
So far this year, the three largest real estate deals have come from Yelp, Avant, and SAC Wireless, who have moved into bigger offices downtown.
In total, digital tech software and services companies have added more than 730,000 new jobs in the country — an increase that represents more than one-fifth of all new jobs based out of office spaces — and was the leading driver of office market demand, accounting for 20 percent of leasing activity in 2015.
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