The San Francisco Bay Area tops the nation in both the quality of its tech labor pool and the money required to employ them, according to CBRE’s annual Scoring Tech Talent report.
Despite all the early-pandemic headlines about tech companies leaving the Bay Area, the recent rounds of tech layoffs and the well-publicized lack of leasing demand, the Bay Area has both the largest tech talent pool and the highest number of tech roles of any U.S. market, according to the report.
The region employs more than 400,000 techies, 11.6 percent of total Bay Area employment. That’s the highest in the U.S., though the report also looked at Canadian cities and Ottowa has a higher concentration at more than 13 percent. The average for the 50 markets analyzed in the U.S. and Canada is only 5.6 percent.
Between 2017 and 2022, the Bay Area added more than 75,000 tech jobs, a 23 percent increase. Austin, Dallas, Nashville, Salt Lake City and the Inland Empire all saw bigger increases but their concentration and total number of tech jobs are far lower. The percent of software engineers employed in the tech industry in the Bay Area is the highest in the nation at 76.6 percent, just beating out Seattle but well above Austin and Portland.
“Many Bay Area tech employers slowed hiring and made staff reductions, but most layoffs are affecting non-tech roles like marketing, finance and recruiting, so many companies continue to hold on to their engineering talent,” Chris Shepherd, executive vice president in CBRE’s Tech and Media Practice, said in a statement.
It’s also more expensive to operate a tech company in the Bay Area than anywhere else, which could be one reason companies are looking to save money by cutting back on office space or going remote. For a 500-employee company renting 60,000 square feet, the total cost for rent and salaries for one year is close to $79 million, far higher than second-place New York, which totalled more than $65 million and third-place Seattle, where the cost is over $62 million. Average rent costs of $4.2 million in the Bay Area are higher than anywhere else outside New York, where the rents are just over $4.6 million.
The biggest expense for tech companies is salaries and San Francisco has by far the highest salaries paid for employees across the board, from tech to supporting roles to management. Tech workers make up more than 50 percent of the employees at an average U.S. tech company and the average tech worker in the Bay Area makes $157,000 a year, about $34,000 more than next-highest-paying Seattle and New York.
Despite the higher prices, tech companies continue to see value in being in tech centers, according to the report.
“Even as remote and hybrid work become 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,” it reads.
The talent pipeline coming out of the area’s colleges and universities also continues to grow, according to the report. Between 2017 and 2021, there was a 38 percent increase in students completing computer engineering degrees, while math and statistics were up 22 percent.
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Tech workers are largely in their 20s and 30s and while the Bay Area has lost 11.6 percent of its twentysomethings since 2016, according to the report, it has increased its 30-somethings by nearly 3 percent. The fact that the Bay Area may be attracting those further along in their careers could be one reason labor costs are higher here, in addition to the need to attract talent despite the higher housing costs.
While owning a home may be out of reach, even to tech workers, the Bay Area’s rental market is a relative bargain with a 22.7 percent rent-to-tech-wage ratio. New York is the highest at 34.2 percent and South Florida, Los Angeles and San Diego are all more than 29 percent. Despite recent plateaus in the city, rents are shooting up on the Peninsula and Bay Area-wide rents ticked higher by nearly 5 percent to about $3,000 a month, according to data from brokerage CBRE.