High-tech job growth accelerated in Denver in 2021 and 2022, outpacing all but two other markets in CBRE’s annual Tech-30 report, which measures the tech industry’s impact on office demand and rents in the 30 leading tech markets in the U.S. and Canada.
Denver’s 23.7% growth in high-tech jobs in 2021 and 2022 easily surpassed its prior two-year pace of 16.4% growth. While Denver’s job growth outperformed all but Vancouver and Austin, the metro area saw negative office net absorption growth over the past two years. Net absorption, a proxy for demand, measures the net amount of space newly occupied against that newly vacated. Only five of the top 30 tech markets had positive office net absorption growth in the period analyzed (Q3 2021 – Q2 2023).
“The tech sector has been slower to return to the office, and this has impacted places like Denver where the tech industry was leading demand for office space going into the pandemic. The good news is Denver has not only continued but accelerated its ability to attract tech talent in recent years. There’s optimism that this job growth will translate to office demand down the road. We are just starting to see tech companies begin to enforce their return-to-office mandates more strictly, and this is likely to have a positive ripple effect on the office markets serving tech talent, like Denver,” said Ryan Link, senior vice president with CBRE’s Tech & Media practice in Denver.
Nationally, tech’s share of total office leasing activity increased each quarter this year, even amid reduced U.S. office leasing activity overall. In Q3 2023, the tech industry reclaimed its position as the top sector in office leasing activity after losing its lead in Q1 2022. Tech’s share of office leasing was 16.5% (7.3 million sq. ft.) in Q3 2023, up from a 10-year low of 9.3% (3.9 million sq. ft.) in Q4 2022. Tech moved back ahead of the finance and insurance sector, which claimed a 15% share of Q3 office leasing activity.
Tech’s share of total office leasing activity has not been so linear in Denver. Tech was the leading sector for office leasing activity leading up to and during the early quarters of the pandemic, claiming 22.9% of all leasing activity from Q4 2019 to Q3 2021. Tech was unseated by business services and the energy sector in recent quarters, claiming just 12% of Denver’s total leasing activity from Q4 2021 to Q3 2023.
Total U.S. tech industry employment remains well above pre-pandemic levels, even though tech software and services employment growth decelerated to 0.4% in H1 2023 from 3% in H2 2022. September 2023 marked the fewest tech industry layoffs since June 2022, according to CBRE’s analysis of data from job search firm Challenger, Gray & Christmas.
Denver’s tech workforce of 102,333 people amounts to 19.7% of all office-using positions in the city. Another growth driver: Tech companies claimed nearly two-thirds of the $782.3 million in venture capital funding awarded to Denver companies in this year’s first half.
“There’s a strong correlation between venture capital funding and industry growth. The fact that investors feel confident in the ideas, innovation and talent emanating from Denver is an endorsement of tech’s bright future in Colorado,” added Link.
The report also looks to the next 10 tech markets to watch, where Colorado Springs ranked third for its high concentration of office employment in the high-tech industry. Nearly 20% of the market’s office-using jobs are in high tech.
“Colorado Springs’ large pool of highly skilled workers, desirable quality of life and relatively low office rent compared to other tech hubs make it a strong contender for future tech industry growth,” said Jared May, vice president with CBRE in Colorado Springs.
Average asking office rent in Colorado Springs was $21.09 per sq. ft. annually as of Q2 2023, compared to $32.11 in metro Denver, $48.14 in Austin, and $73.59 in San Francisco.
To read the Tech-30 report, click here.