In July, the Federal Reserve Bank of New York took a detailed look at New York City’s growing tech sector. By focusing solely on tech-producing companies rather than tech job’s in other industries, The New York Fed was able to accurately measure the city’s tech sector and provide information that can be quite useful for commercial brokers seeking to attract top-quality tech tenants.
What the Report Shows
The Fed’s report looks at seven core technology industries:
- Computer Manufacturing
- Electronic Shopping
- Software Publishing
- Data Processing, Hosting & Related Services
- Internet Publishing & Broadcasting and Web Search Portals
- Computer Systems Design & Related
- Scientific R&D Services
It’s no surprise that the majority (86%) of tech jobs are located in Manhattan, but the boroughs of Brooklyn and Queens were both noted as growing tech hubs, likely due to their convenient locations and lower operating costs.
The Fed’s report also points out that 5% of all New York City jobs are in the tech sector, compared to 4% nationwide. This represents almost 115,000 jobs (the fourth largest figure in the country). This may be a lower concentration than markets like Silicon Valley (25.4%) and Seattle (13.5%), but many experts agree the city’s diverse economy is an advantage that can help support a growing tech sector for a long time to come.
Compared to Wall Street, the NYC tech sector is on a roll. Between 2007 and 2014, jobs in the finance industry decreased by 11%. Over the same period, jobs in the city’s tech sector increased by 57% – outpacing growth in famous tech hubs including the previously mentioned Silicon Valley and Seattle. The average rate of growth for tech jobs in the US was just 12% across that time.
Tech workers are getting paid well, too. The average annual income for a job in the tech sector? $118,000, or about 40% more than the citywide average of $84,000.
What’s Causing the Rise?
There are a number of factors contributing to New York’s rising tech industry, including:
- An overall diversification away from the financial sector following last decade’s financial crisis. Technology isn’t replacing Wall Street, however. In fact, many tech businesses come to New York to create products for the city’s finance and media industries.
- Large sums of investment capital available. Out of all fifty states, tech companies in New York received the second largest amount of capital invested over the past years with $6.4 billion, second only to California.
- The city’s high quality-of-life and vibrant urban setting. There’s been an increasing shift towards urban office locations in recent years, starkly contrasting the historical trends of tech centers being located on the outskirts of metropolitan areas.
The Tech Sector’s Impact on Commercial Real Estate
With the current pace of growth in the tech sector, commercial real estate professionals cannot afford to overlook the changing needs of modern businesses. Successful landlords and brokers are already embracing technology to attract great tenants and keep vacancy low.
Instead of spacious, easily dividable floor plans, tech tenants are looking for buildings with residential-like amenities and convenient transportation options that will attract a younger tech-savvy workforce. But even more than private gyms and tenant lounges, technology-focused companies want well-connected office space that offers reliable, high-speed broadband access.
To stand out to tech startups, brokers are increasingly turning to high-tech marketing techniques like Floored’s 3D modeling, and are highlighting their buildings’ tech infrastructure through the Wired Certification.
New York City may not be the largest technology hub in the country, but its tech sector has seen substantial growth over the past decade. With over 110,000 employees working for thousands of technology-focused companies, there’s already plenty of opportunity for brokers to attract tech startups. But based on current growth and an optimistic outlook for the future, the demand for tech-friendly office space is likely to increase even further over the next few years.