Los Angeles Continues Tech Growth Momentum
Los Angeles, which is already home to Evan Spiegel’s Snap, Inc., Shervin Pishevar’s Hyperloop One, and Elon Musk’s SpaceX, has emerged as one of the country’s most vibrant tech centers. According to CBRE’s new Tech-30 2017 Report, that growth momentum is continuing: Between 2015 and 2016, the city saw 20 percent high tech and software job growth, making it one of the top three markets in the U.S.
The Tech-30 Report is a comprehensive analysis of tech-related office markets in the U.S. and Canada. This year, 18 markets increased their two-year high-tech software and service job growth rates. The top three growth rates were seen in Montréal (18%), Pittsburgh (17%), and Los Angeles (13%).
According to the report, Los Angeles is particularly benefiting from billions of dollars in spending on original media content by tech companies, which has been driving growth for traditional media firms. Smaller tech companies are also growing in number and importance to LA’s tech economy. High tech firms are reportedly choosing the region for its educated Millennial workforce and the southern California lifestyle.
One of the city’s biggest real estate deals in 2017 was an 80,000-square-foot expansion by video game publisher Riot Games, Inc., which now occupies an expansive campus in west Los Angeles. In downtown Los Angeles, one of the biggest tenants is transportation technology company Hyperloop One, which, according to CBRE Senior Vice President John Zanetos, increased its office space from 6,000 square feet to more than 70,000 square feet within an 18-month period.
“Downtown is one of the submarkets that is experiencing a lot of the benefits from the growth in the tech sector,” commented Zanetos. “The reason why areas such as downtown are seeing this kicked-up interest are the massive rent increases in places such as Santa Monica. Submarkets such as downtown that offer a centralized location for their workforce[s], lots of housing, and amenities – downtown now boasts 20 of the city’s top restaurants — are benefiting greatly.”
Santa Monica has long been one of the most important tech business clusters in Los Angeles, with well known companies like Hulu, Tastemade and Cornerstone OnDemand calling it home. CBRE’s Tech-30 Report shows Santa Monica as the top tech submarket, with an average rent of $71 and a rent vacancy of only 7.7 percent, half the average of the rest of Los Angeles (14 percent). Other L.A. county neighborhoods, including Venice, Playa Vista, and Culver City, are also growing quickly.
Los Angeles’ natural advantages — such as Hollywood’s entertainment engine, the vibrant higher education talent pool, and always-on sunshine will no doubt continue to attract startups and tech companies. It’s worth noting that Elon Musk’s Boring Company, which is based in Hawthorne, has begun digging an underground tunnel to address the city’s notorious traffic problem — the top complaint of L.A.’s’ 9-to-5 commuters. If that tunnel becomes a reality, it stands to attract even more tech talent from around the country and the globe.