Tech Cities: The Global Intersection of Talent and Real Estate
Table of Contents
For the first two years of the pandemic, the tech sector shone as a resilient and rising sector for talent in the post-pandemic world. Despite this, the first half of 2022 was a difficult period for many companies, and the tech sector has not been immune to these challenges. This has included declines in stock values, hiring freezes and layoff announcements.
The mid-2022 turbulence is part of normal cyclical downturns that impact financial markets and specific industries. We expect the tech sector to continue to be a driving force for economies around the globe. The demand for tech talent—even if some job losses occur—will not abate anytime soon. Because of this, the evolution of cities as clusters for tech talent and tech occupiers will remain critical to commercial real estate (CRE) decision-makers.
On a global scale, tech is a larger portion of major economies —and commercial real estate—than ever before. Over the past decade, global technology employment increased substantially. Across the largest 15 global economies, information and communication employment increased by nearly 23 million workers, and it is forecast to grow by 17%, adding another 12 million workers over the next 10 years.1
In Q1 2022, 3.3% of all jobs in the top 15 global economies were in the information and communication sector.
It is an even greater share in countries such as China, Ireland, Singapore, Finland, the UK and Japan. The share is forecasted to increase over the next decade to 3.7%, led by 100+ bps increases in share in current stalwarts—Ireland, China and Singapore—along with growing Eastern European countries, such as Romania and Hungary.2
The tech sector was resilient to the initial effects of the pandemic, rebounding quickly and outpacing most other sectors. Office-using and tech employment fully recovered to pre-pandemic levels within two years in most major economies. For example, in Q1 2022 the European Union had 7.4% more information and communication workers than in Q1 20204 and the growth is likely to continue.
As of May 2022, there were 685,000 job postings for tech occupations, which represent a 75% increase over the 394,000 postings in February 2020.5 As the global economy continues to shift, tech talent will remain a critical driver of growth and a key component of how the CRE sector will evolve through the 2020s.
The concept of ranking tech cities can prove difficult because each company’s growth strategy differs, based on current locations, specific skills and labor needs, location of customers, and the present and future state of countless financial and business priorities.
For example, Paris has more than twice the number of available technology workers as Chicago, but less than half as many computer programmers; a company looking to deepen their programming depth may lean toward a new location in Chicago, while another organization needing to enhance its data science and analyst capabilities might find Paris more attractive. Regardless of location, the cost of workers needs to be balanced with any discussion of depth of the talent pool.
Location strategy is always driven by a combination of these key factors: talent, office real estate, the local environment for businesses and employees, and all the related costs.
All that said, in this report, we identify key metrics that will be important to most—if not all—tech companies and illuminate the current leading tech hubs as well as the up-and-coming opportune locations that companies could consider for future expansion. Every expansion or relocation decision is nuanced and full of company- and time-specific criteria, however some key factors remain consistent.
Key Evaluation Metrics
In the 10 largest global economies, there are now 2.7 million more office workers than there were at the beginning of the pandemic, just two years ago. Finding and keeping the best people in a tight labor market is a challenge, and with more companies in other sectors needing increasing amounts of technological skill, the competition will only grow.
We have entered a world of increased workforce agility, and occupiers are redefining how and when employees utilize the office to optimize productivity, innovation and work-life balance. With increased flexibility, the quality and location of office space becomes more important. It is critical to identify markets with dynamic ecosystems of tech companies and employees, as well as ample availability of high-quality office space.
High-skill talent has always had some level of choice over where to live and work, but increased workplace flexibility will allow more people to choose cities that provide attractive living environments. National and local leadership, governance and infrastructure will be critical components in where technology workers and businesses locate.
Overarching all of this are economics. Efficiency and cost containment are always important, but maybe even more so coming out of a pandemic, with historical inflation and growing concerns of a potential double-dip recession. The number-one cost for technology companies is talent. Occupiers are looking for opportunities to save on the leasing and build-out of high-quality office space that will serve as innovation and collaboration centers for employees.
Cushman & Wakefield selected more than 115 different tech cities across the world to evaluate the talent, real estate and business environment. The top tech hubs in each global region are identified by aggregating 14 factors, weighing each according to perceived importance for tech companies’ market selection criteria, and then validating through industry experts and rigorous model testing.
>>Click for more information on our complete Methodology and Endnotes.
Introduction | Key Evaluation Metrics | Top Tech Cities | Talent | Real Estate | Business Environment
Top Tech Cities by Global Region
The result is the following list of top markets in each region, sorted alphabetically:
This is one method to identify top tech hubs but is not the definitive ranking for all companies or real estate investors. Throughout the report, you can sort global cities by various talent, real estate and environment metrics utilized for this analysis.
Introduction | Key Evaluation Metrics | Top Tech Cities | Talent | Real Estate | Business Environment
Talent remains a critical resource through which tech occupiers evaluate potential locations. Evaluation of markets can be segmented into key national and city-level factors that are critical for tech employers, wherever they may look to expand.
Labor data availability varies across regions and countries. To create an apples-to-apples global comparison, talent depth and competitiveness ratings were based on three occupations: IT network professionals, analysts and data scientists, and computer programmers. In cases where more robust data is available, local markets may contain statistics related to a broader occupation set. If not noted otherwise, labor data is based on these three occupations.
|>>Talent Pool Depth
Greater numbers of computer programmers, IT network professionals, and analysts and data scientists provide a key catalyst for continuous growth.
Higher ratios of candidates-to-job-postings represent greater supply to fill open roles and more limited competition from other companies in the market.
|>>Talent Pool Cost
Higher salaries for tech workforce can impede employers from filling valuable positions—payroll represents the top expense for most tech companies.
|Diversity of Workforce
As technology occupiers seek to increase inclusivity and equity, it becomes vital to access markets with more diverse talent pools.
|>>Talent Pool Quality
Markets with universities and research institutions generate more educated workforces with deeper skillsets.
Dynamic markets with forecasted growth offer long-term opportunity for occupiers.
Talent Pool Depth
Larger markets usually benefit from greater talent pool depth, but it is dependent upon the sector mix in a local economy and the share of applicable tech professions.
APAC continues to be led by Tokyo and Beijing, followed by Shanghai and Bengaluru. However, Bengaluru is heavily weighted toward computer programming talent and Shanghai is more balanced.
Unsurprisingly, traditional U.S. tech hubs, such as the San Francisco Bay Area and New York City excel. São Paulo, Toronto and Los Angeles are other Americas markets with substantial talent pool.
London’s talent pool depth remains dominant in Europe, with Paris coming in second.
The occupation mix varies across markets. For example:
Use the map below to toggle between key drivers that matter most to tech occupiers when making location decisions. Available tech talent? Cost of that talent? Or price of office space? Find the markets that align with each driver.
Data scientists are consistently paid the highest annual salary, followed by IT network engineers and then computer programmers.
The San Francisco Bay Area continues to live up to its reputation as the highest cost market for tech talent.
Markets in the U.S. Sun Belt offer savings compared to major U.S. tech hubs, as do Canadian markets. For example, the weighted average salary in Toronto is two-thirds of the San Francisco Bay Area and 20% below Seattle.
European talent costs are clustered without sizable differences, though Copenhagen, London and Amsterdam are the most expensive. The gap between pay for data scientists and the other two professions is larger in major German markets, such as Munich, Hamburg and Berlin.
South Asian markets claimed the top five most affordable markets for the APAC region. Australian markets and Tokyo were noticeably higher cost than the remainder of the APAC comparison set.
Measuring tech talent quality is difficult, but one way to do so is to measure the proximity to high-quality, trained computer science graduates. By analyzing QS World University Rankings data on computer science students, Cushman & Wakefield was able to provide a proxy for the availability of quality tech talent in markets around the globe.
Many of the top-performing markets are, not surprisingly, large global gateways with access to substantial student populations. These locations include markets such as Beijing, Hong Kong, Sydney, Los Angeles, Boston, Toronto, London and Munich. Additionally, another tier of markets with access to a deep bench of quality educational institutions also have advantages cities such as Raleigh-Durham, Montreal, Milan and Manchester, UK.
Thick labor markets with high-quality talent will attract additional occupiers looking for technical skills, increasing competition for the existing talent.
This can be a virtuous cycle where more job availabilities entice additional qualified workers to a city, which in turn makes it more attractive for companies to move into and expand in those markets.
After a dip in the middle of 2020, demand for tech talent has been on the rise. Globally, job postings for computer programmers, IT network professionals, and analysts and data scientists increased over 50% in the first year of the pandemic.
Postings shot up in Q2 2022, hitting 840,000 in May 2022, which included 390,000 computer programming job postings, 340,000 postings for analysts/data scientists and 110,000 postings for IT network professionals.
To measure the market-specific talent supply-and-demand balance, we used a ratio of job postings to talent pool and population.
Not surprisingly, some deep talent pools have beneficial competitive dynamics for employers (i.e., more eligible workers per job posting).
Markets such as these are likely to continue to be tech occupation hot beds: Toronto, San Francisco Bay Area, London, Paris and Beijing. Markets with medium-sized labor pools can also have an attractive balance of talent, such as Montreal, Munich and Amsterdam.
London, Paris, Munich and Amsterdam have Europe's strongest candidate pools for existing tech job postings.
Beijing and Bengaluru led APAC with strong talent-to-job posting ratios. APAC generally scored lower, suggesting fast growth in many Asian markets has led to a relatively high number of listings per qualified individual.
Canada had several markets at the top of the list, led by Ottawa and Toronto. The San Francisco Bay Area and Washington, DC are near the top, while other U.S. gateway markets are more limited in terms of competitiveness.
Introduction | Key Evaluation Metrics | Top Tech Cities | Talent | Real Estate | Business Environment
Real Estate Cost
The markets with the highest asking rents for Class A CBD or prime office real estate are global gateway cities. Europe is well represented among the most expensive tech markets around the globe, led by London, Paris and Stockholm.
Office rental costs are most bifurcated in the APAC region. Three of the five most expensive markets—Hong Kong, Tokyo and Singapore—are in the APAC region, as are seven of the 10 least expensive markets.
Three of the five most expensive markets and seven of the ten least expensive markets are in the APAC region.
After the gateway markets like San Francisco and Toronto, the most expensive office space is in tech-dominant markets, such as Austin, Seattle and Puget Sound – Eastside.
Cost-effective options for office real estate can be found in:
Much of Latin America and secondary markets in the U.S. Midwest such as Kansas City, Cincinnati and St. Louis.
Various parts of India and smaller Chinese markets, such as Tianjin and Chongqing.
Smaller Western European markets like Toulouse and Turin, and Eastern European capitals such as Istanbul and Bucharest.
Real Estate VacancyIn the wake of the pandemic, vacancy levels increased to a greater degree in the Americas, accounting for two-thirds of markets currently with 20%+ vacancy rates. Vacancy is below 10% in two Canadian markets—Toronto and Vancouver—as well as in several other Americas markets, including Santiago, Boston and Boise.
European markets tend to be tighter, accounting for 60% of the 30 markets with vacancy rates below 10%. German markets—Munich, Hamburg and Berlin—are in the 4%-5% vacancy range.
In many cases, higher vacancy rates are due to supply-side growth during the pandemic, evidenced by the many deliveries since 2020. Construction office deliveries will continue to create opportunities for tech companies to move into new, high-quality space that attracts and retains talent in critical labor markets.
Real Estate New Product
Several APAC tech hubs have over 20 million square feet (msf) of office space under construction, representing 20% of current inventory in Delhi and 50% in Hyderabad. Construction pipelines in South Asian markets are noticeably higher in East Asia and Australia construction remains limited.
In the Americas, New York City has the deepest pipeline of office space under construction, at more than 16+ msf. As a percentage of current inventory, however, that only represents 6% of the current inventory in Manhattan, well below the share of inventory under construction in Vancouver, Austin and Toronto.
The largest pipelines in Europe are in Berlin, Munich, Paris and London, all of which are over 15 msf. As a percentage of current inventory, however, European construction pipelines are conservative, with Dublin as the only market exceeding 10%.
Tech firms take serious consideration of the economic health of a given market.
Markets with slow economies, restrictive government policies and negative political dynamics can all put downward pressure on the ability of firms to thrive.
Alternatively, markets may also have positive environmental factors such as tax incentives, strong infrastructure and the presence of other vibrant businesses.
To capture this particular trend, we considered a number of different factors:
Business confidence surveys
We used each market’s country to act as a representation of the combined effect of these positive and negative environmental factors.
Presence and health of other firms
In tandem with the business confidence, we considered the percentage of businesses in a market’s country that fall within the information / communication technology categories.
Digital legal framework
The sovereignty of data, protections for both firms and consumers as well as data privacy policies all factor into the ability of a firm to locate in a market. We utilized the adaptation of legal framework to digital business models as rated by WEF Global Competitiveness Index.
Markets with high levels of accountability, political stability, absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption will rank highly for tech employers seeking seamless operation. These factors are often key factors in decision-making for talent as well. We utilized the country-level average percentile ranking of the World Banks’ Worldwide Governance Indicators which encompass all the factors named above.
Quality of life
Quality of life is key to ensuring a continued pipeline of talent and the ability to retain that talent. Using data aggregated in the Mercer Quality of Living survey, we considered a wide range of quality of life factors including:
Location Strategy Beyond this Study
The methodology used and analysis performed to identify top global tech markets seeks to capture current and future dynamics, using metrics based on historical data. The acceleration of trends in digitization, remote working and sustainability affect the positioning of these cities in the global pursuit for tech talent. Location is evolving into a broader, complex and fluid concept. Occupiers’ location strategy is expected to develop in line with the following trends, giving way to additional evaluation criteria as the tech sector evolves:
Global talent sourcing
A distributed operating model with virtual presence everywhere accessing a broader talent pool, increasing talent diversity, spreading economic development, benefiting the environment.
Regional cities winning ground
Regional cities with good universities, strong links to large cities, offering a combination of quality of life and affordability may hold strategic advantages.
Catchment areas are expanding
With remote work being the norm, talent pools are geographically expanding beyond typical city boundaries with employees increased openness to longer commutes and fewer days spent in-office, allowing companies to reach out to new talent that sits in broader geographic areas.
The role of global headquarters is changing
The size and type of space in core office urban hubs is evolving to facilitate learning, innovation, collaboration and connection with company’s culture.
As a result, there are additional future factors that may drive location decisions and define the next global Tech Cities:
Consideration of these emerging location drivers offers immense opportunity for new cities to emerge and potentially challenge today’s established tech hubs.
Workplace Topics to Explore
The New Wave in the War for Talent: Choice
Building an Office to Support Employees as People
The Rise of Innovation Districts
|1||Talent||Talent pool depth||Emsi||Heavy|
|2||Talent||Talent cost||Economic Research Institute (ERI)||Medium|
|3||Talent||Talent quality||Time Higher Education||Medium|
|4||Talent||Talent pool competitiveness||Emsi||Medium|
|5||Talent||Diversity of workforce||World Economic Forum (WEF)||Medium|
|6||Talent||Population growth||Moodys; Various governmental agenciesa||Medium|
|7||Real Estate||Office: Asking rents||Cushman & Wakefield||Low|
|8||Real Estate||Office: Vacancy||Cushman & Wakefield||Medium|
|9||Real Estate||Office: Space under construction||Cushman & Wakefield||Medium|
|10||Business Environment||Business confidence||Organization for Economic Co-operation and Development (OECD); Moody||Low|
|11||Business Environment||Tech share of economy||Moodys; Various government agencies||Low|
|12||Business Environment||Digital legal framework||World Economic Forum (WEF)||Low|
|13||Business Environment||Worldwide governance ranking||World Bank||Low|
|14||Business Environment||Quality of living||Mercer||Low|
|#1||Talent||Talent pool depth||Emsi||Heavy|
|#2||Talent||Talent cost||Economic Research Institute (ERI)||Medium|
|#3||Talent||Talent quality||Time Higher Education||Medium|
|#4||Talent||Talent pool competitiveness||Emsi||Medium|
|#5||Talent||Diversity of workforce||World Economic Forum (WEF)||Medium|
|#6||Talent||Population growth||Moodys; Various governmental agenciesa||Medium|
|#7||Real Estate||Office: Asking rents||Cushman & Wakefield||Low|
|#8||Real Estate||Office: Vacancy||Cushman & Wakefield||Medium|
|#9||Real Estate||Office: Space under construction||Cushman & Wakefield||Medium|
|#10||Business Environment||Business confidence||Organization for Economic Co-operation and Development (OECD); Moody||Low|
|#11||Business Environment||Tech share of economy||Moodys; Various government agencies||Low|
|#12||Business Environment||Digital legal framework||World Economic Forum (WEF)||Low|
|#13||Business Environment||Worldwide governance ranking||World Bank||Low|
|#14||Business Environment||Quality of living||Mercer||Low|
|1-3 Moody's Analytics Forecasted; Various national labor statistics agencies||9-10 Emsi; Cushman & Wakefield Research|
|4 Moody's Analytics Calculated and Forecasted||11-12Cushman & Wakefield Research|
|5-6Emsi||13 Economic Research Institute (ERI); Cushman & Wakefield Research|
|7-8Economic Research Institute (ERI)
||14-16Cushman & Wakefield Research