CHICAGO– Technology companies are the primary driver of the U.S. economic recovery, according to JLL’s latest research. Significant adoption and demand at the onset of the pandemic has only accelerated in the succeeding 18 months, generating tremendous growth for the industry and optimism going into 2022.
At the beginning of the pandemic, tech employment numbers declined, however losses were minimal by comparison to other industries. The sector has since made solid job gains with the largest technology companies leading the way. The top 25 technology companies by market capitalization added more than 600,000 workers from 2020 to 2021. Additionally, venture capital flows also reached record levels with $121 billion in funding in 2021 from January through September and IPO activity achieved all-time highs during the same period.
“The sector continues to outperform traditional industries thanks to the unmitigated demand for tools that keep businesses operational,” said Alexander Quinn, Research Director, JLL. “COVID-19 has been an accelerant for trends we were seeing prior to the pandemic, leading to increased use and dependence on all things digital. What’s interesting is that, despite society’s increased appetite for digital solutions and even their own statements on when they’ll return to the office, big tech has increased its physical office share, indicating that even the most digitally native companies see a value for physical collaboration opportunities.”
In fact, major tech companies secured a record 15.3 million square feet of office space since early 2020. Over half of the leases signed since Q1 2020 are expansions or new to market transactions. The larger leases occurred primarily at locations with higher quality amenities and more modern, efficient and sustainable work environments, which major tech companies hope will attract workers back to the office.
While major markets remain centers of gravity for talent, smaller markets are capturing a more remote first workforce, expanding talent and growth opportunities for companies of all sizes.
“The industry has matured, and so has its workforce, lending itself to greater diversification across geographies,” said Quinn. “The pursuit of talent is no longer confined to a few gateway markets and has reached many North American cities.”
These cities generally have strong educational institutions, provide a high quality of life and creative environment and attract young talent both domestically and internationally. For example, from 2020 to 2021, tech employment has grown faster in more traditional technology markets such as the Bay Area, New York and Seattle. However, Dallas, Austin and Denver are rapidly growing their share of technology workers, with San Diego, Atlanta, Kansas City and Baltimore showing increased emphasis in tech.