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6/08/17
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Los Angeles has emerged in 18th place out of 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.
“Los Angeles, which was historically known as the ‘Entertainment Capital of the World,’ more recently has started to become recognized as a hub for new media and technology companies,” said Marques Williams, Transaction Advisor specializing in tenant brokerage with Cushman & Wakefield’s Media & Technology Practice Group. “The city’s sprawling topography has created unique sub-pockets that are individually reaching the maturation phase. Companies are planting their flags in these industry-specific micro-communities whether it’s content/production in Hollywood (Netflix, Viacom), tech/advertising in the Westside (Snapchat, Riot Games), or startups in Downtown LA (Hyperloop, GoFundMe).”
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, CA (Silicon Valley); 2. San Francisco, CA; 3. Washington, DC; 4. Boston/Cambridge, MA; and 5. Raleigh/Durham/Chapel Hill, NC.
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., states that “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.”
Report co-author and Regional Director, Northwest U.S. Research at Cushman & Wakefield, in San Francisco, Robert Sammons, said that while it was not surprising to see San Jose (Silicon Valley) and San Francisco continue to dominate, 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).
To many startup and tech community workers around the world, it may be surprising to see New York (no. 15) and Los Angeles (no. 18) so far down 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.
“Now what we’re seeing in response to the growth in the TAMI sector has been an increase in investment by local universities in engineering and tech schools. All the local universities recognizing the need have begun to invest in these areas of education, and as a result you’re getting more of a tech-savvy, talented workforce. These things tend to feed on themselves, and I would expect that if we did this ranking three or four years from now, it might look a little different for New York.”
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 centerMcCarthy said, “There are myriad industries centered in LA, which has a good talent pool, and I would expect that also will come into play as we start to see these things evolve.”
According to Williams, the media and technology ecosystem in Los Angeles has afforded companies the opportunity to grow, attract talent, and thrive as an interconnected community.
“As a result, we’ve experienced an incredible clustering effect that has helped shape the city. The tangible proof of the impact is some of the most innovative architecture in Hollywood, the creative campuses on the Westside, and the reshaped skyline in Downtown Los Angeles.”
“Los Angeles is a market that’s just enormous, it’s sprawling. And tech, even though it gets a lot of press for LA and Southern California, kind of gets lost in the mix because of media and entertainment. With Snap and other tech companies centered along “Silicon Beach” and with media and entertainment becoming even more tech-oriented, LA has nowhere to go but up,” Sammons added.
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