Los Angeles’ technology sector is growing — and so is the rent for tech office space, according to a recent study from brokerage firm CBRE Group Inc.
CBRE’s Tech-30 report measured the impact of the tech industry on office rents in 30 markets in the U.S. and Canada.
Los Angeles came in second in CBRE’s survey with approximately 1.3 million square feet in office space leased by technology firms in the last five years.
High-tech employment in Los Angeles increased 14.7 percent during 2016 and 2017, compared to a 13.5 percent rise during the prior two-year period. The rise in employment fueled higher demand for office space. Office asking rents in Los Angeles rose roughly 15.8 percent from second quarter 2016 to second quarter 2018, according to CBRE.
According to the survey, the entertainment industry’s focus on digital content creation is fueling rent growth rates in Los Angeles.
“L.A.’s immense popularity today with tech employers is closely related to the emphasis on content creation,” said CBRE Vice President Chris Penrose in a statement. “These companies require large amounts of space and employees to help produce an immense number of movies and shows, and the greater L.A. area, with all its high-quality talent and great office markets to choose from, can provide just that.”
Penrose added that Southern California real estate has long benefited from some of its more idyllic offerings. “Never underestimate the weather and the beach; it’s a very SoCal specific amenity that employers can offer to their workers like nearly no other region can,” he said.
Los Angeles ranked second to Atlanta, which reported a rent growth of 16.3 percent for the same time period. That said, Atlanta’s tech job growth rate during 2016 and 2017 was lower than L.A.’s tech job growth of approximately 10.7 percent.
Overall, the study found that office rents increased in 26 of the 30 major tech markets, according to said CBRE Research Director Colin Yasukochi, who said that “as space availability in top tech submarkets continues to tighten, we expect large tech companies to continue to expand outside their headquarters markets — including further into secondary and even tertiary markets.”