Cushman & Wakefield report puts Denver at No. 8 among ‘tech cities’

Denver has emerged in eighth place within the top 25 U.S. tech cities, with San Jose (Silicon Valley) and San Francisco capturing the first and second spots, respectively, according to Cushman & Wakefield’s inaugural Tech Cities 1.0 national report launched today.

As coastal cities, including San Francisco, New York and Boston, become increasingly expensive and difficult to scale affordably, technology companies are relying more on smaller, middle-tier markets like Denver to grow their workforce, recruit and retain educated talent and decrease overhead costs,” according to Steve Billigimeier, a Cushman & Wakefield executive managing director specializing in tenant brokerage and an expert on the tech sector.

While Denver is not the headquarters location for many big technology companies, we’ve continued to see larger, more established firms opening offices in Denver, including Google, Apple and Amazon.”

“While Denver is not the headquarters location for many big technology companies, we’ve continued to see larger, more established firms opening offices in Denver, including Google, Apple and Amazon,” Billigimeier said. “Additionally, we’ve seen several local start-ups, including Craftsy, SendGrid, HomeAdvisor, and Sphero (largely in part to “Star Wars”) become household names in recent years.”

The top 25 tech cities were determined by analyzing the concentration of factors such as talent, capital and growth opportunity – the key ingredients that comprise a “tech stew.” The heartiest of these tech epicenters are: 1. San Jose, California (Silicon Valley); 2. San Francisco; 3. Washington, D.C.; 4. Boston/Cambridge, Massachusetts; and 5. Raleigh/Durham/Chapel Hill, North Carolina.

Cushman & Wakefield created the Tech Cities 1.0 report to provide greater insight for its clients and industry stakeholders into existing and emerging tech centers that are driving much of today’s U.S. economy.

Ken McCarthy, Cushman & Wakefield’s New York-based principal economist and Applied Research lead for the U.S., said “tech is in everything” and that people would be left behind if they did not adopt technology and change with that technology.

“Basically every company today is a tech company in one way or another. We’re all using it, we’re using various aspects of tech companies to do various things,” McCarthy elaborated. “Whether it’s salesforce as customer relationship management, or Workday for HR, and various other database programs, the old way of doing business just doesn’t work anymore.”

Robert Sammons, report co-author and regional director, Northwest U.S. Research at Cushman & Wakefield, in San Francisco, said while it was not surprising to see San Jose and San Francisco continue to dominate, that mass-transit issues and escalating housing costs in those areas have fanned a tech spillover into secondary markets such as Austin (No. 7), Denver (No. 8), San Diego (No. 9) and Salt Lake City (No. 24).

Billigimeier, who is based in Denver, also alluded to the large influx of millennial employees as helping this spillover, supplemented by nearby universities, including University of Colorado Boulder, Colorado State University and University of Denver.

“In addition to Colorado’s impressive list of colleges and universities, Denver continues to draw employees from across the country and finished first in Forbes’ 2015 and 2016 Best Places for Business list.”

Denver’s overall quality of life also deserves credit, according to Billigimeier. “Denver boasts more sunny days than San Diego, offers world-class skiing within a two-hour drive and is an extremely navigable city. This, in addition to the city’s affordability, makes it attractive from a recruiting and retention standpoint.”

To his point, Denver was closely aligned to, or outranked, cities that have significant tech reputations, such as Seattle (No.6), New York (No. 15), and Los Angeles (No. 18).

Sammons cited Seattle’s cost of living as a lingering issue, somewhat mitigated by a recent uptick in residential development that’s outpacing San Francisco’s, as well as mass-transit challenges.

“Seattle has played catchup over the past few years, but with housing creation now outpacing that of the Bay Area and with a huge $54 billion transportation initiative that recently passed at the ballot box, it will likely allow it to compete much more aggressively with those markets at the very top of the list.”

“In the case of New York, when we started to see a growth in tech employment here about four or five years ago, one of the big issues for the companies coming to New York, particularly from San Francisco or Silicon Valley, was a lack of the skilled labor force they needed, particularly engineers,” McCarthy said.

In terms of Los Angeles, both McCarthy and Sammons noted its exceptionally diverse economy.

“Media is important, and you can’t lose sight of the fact that historically it’s also been an important manufacturing and industrial center,” McCarthy said, “There are myriad industries centered in L.A., which has a good talent pool, and I would expect that also will come into play as we start to see these things evolve.”

Edited by the Colorado Real Estate Journal staff.