Atlanta a Top Ten high tech market with low cost of doing business, says CBRE
By David Pendered
Atlanta’s Top Ten ranking as a high tech market was underscored again last week when Kaiser Permanente announced plans to establish an IT hub in Midtown.
KP’s chief information officer, Dick Daniels, talked up Midtown’s walkability and access to public transportation during the announcement.
Atlanta also offers a number of characteristics that are attractive to high tech operations, according to a report released April 13 by CBRE, a major commercial real estate and investment firm. These characteristics placed Atlanta at No. 10 on a list of 50 major metros.
Atlanta trailed Silicon Valley, Washington, San Francisco, San Francisco Peninsula, New York, Seattle, Boston, Baltimore and Austin. Atlanta topped regional colleagues including Dallas/Ft. Worth (11th), Raleigh/Durham (14th), and Charlotte (31st).
Incidentally, the CBRE report represents both the city of Atlanta and the metro area. Some figures in the report are specific to Atlanta; others are drawn from federal agencies and address the metropolitan Atlanta statistical area, which is a 28-county region.
The overall low cost of doing business is one factor drawing IT firms to Atlanta.
Labor is a significant cost, and Atlanta ranked 25th in average tech talent wages. At $82,540, the average IT wage in Atlanta was 96 percent of the average IT wage nationwide.
Top-ranked Silicon Valley had an average IT wage of $116,237. That wage won’t go as far as it sounds, given that average rent for an apartment will total $30,252 a year. In Atlanta, rental costs will average $11,568 a year, according to CBRE’s report.
CBRE determined that Atlanta offers lower costs than its Top Ten rivals in the following categories:
- Apartment rent;
- Cost of living;
- Occupancy costs;
- Overall cost of doing business.
Even at the current wage rate, the average IT worker in Atlanta can enjoy a good standard of living. The average IT wage is nearly double the average non-IT wage, of $44,967, according to CBRE’s report.
CBRE determined that high tech markets share three primary characteristics:
- High educational attainment – 46.8 percent of the Atlanta market has at least a bachelor degree by age 25.
- High proportion of millennials – the Atlanta market ranks fifth in terms of the concentration of residents aged 21 years to 29 years; the national figure is 14 percent.
- Gender diversity in the tech talent labor pool – Atlanta’s IT labor pool is 75 percent male, 25 percent female; the national average is 76.2 percent male, 23.8 percent female.
CBRE is paying attention to the IT market because of its effect on the office market. The industry is growing rapidly, as IT permeates everyday life.
Yet IT firms operate in game-changing ways. For example, IT firms allocate more of their resources to labor costs than to office space, which affects the size, type and cost of space IT firms seek. CBRE determined that:
- “Combining wage and real estate cost market-by-market, provides interesting insight into what a typical tech company might have to pay to operate in one or many of the tech talent markets. … San Francisco Bay Area markets topped the list with the highest estimated costs. The fact that these high cost markets can still attract employers of tech talent illustrates that often finding the top tech talent is well worth the price paid, especially for those companies looking to drive technological innovation.”