Which are the highest- and lowest-cost markets to operate in?
Scoring Tech Talent 2022
Local market wages were applied to the various occupations to determine total annual wage costs by market, while local market rents were used to estimate the annual cost of renting a 75,000-sq.-ft. office to house 500 employees.6 The San Francisco Bay Area topped the list with the highest estimated annual cost at more than $69 million, followed distantly by the other major tech markets of New York Metro, Seattle and Washington, D.C. (Figure 25). The lowest cost markets were all in Canada.
Figure 25: Estimated One-Year Company Costs by Market (500 Employees; 75,000 Sq. Ft. of Office Space)
Source: U.S. Bureau of Labor Statistics, April 2022, Canada Statistics April 2022, CBRE Research (Metro), Q4 2021.
6 The COVID-19 outbreak may have lasting effects on office use and density with the rise of hybrid and remote working arrangements.
Employee wages are the largest cost for tech companies.
Highly skilled and educated tech workers often command more than double the average non-tech salary. The San Francisco Bay Area ranked highest for average tech worker salary at $140,000 per year, about $18,000 more than the next highest market (Seattle). The average tech worker salary in 15 of the 50 top tech talent markets was at or above their respective national average (10 U.S. markets above the U.S. average and five Canadian markets above the Canadian average).
Office rent is the second-highest cost for most companies. Even as remote work becomes more common, companies understand the benefits of tech clustering and often place a higher value on specific submarkets and even specific streets convenient to tech talent. Manhattan has the highest average office rents, followed by the San Francisco Bay Area, Austin, Greater Los Angeles/Orange County and Seattle.
Combining wage and real estate costs provides insight into what a tech company might pay to operate in any of the top 50 tech talent markets. For this comparison, U.S. occupational averages were analyzed to determine the makeup of a typical 500-person tech company using 75,000 sq. ft. of office space.
This occupational breakdown provides interesting insight into each market’s relative costs (Figure 24).
Figure 24: Average U.S. Tech Company Occupation Pools
*Tech talent includes the following occupation categories: software developers and programmers; computer support, database and systems; technology and engineering related; and computer information system managers.
Source: U.S. Bureau of Labor Statistics (National), April 2022.
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