Manhattan is one of the fastest-growing technology hubs in the nation, a trend that is expected to increasingly and positively impact the city’s commercial real estate market, according to a report, “NYC Tech 2012: Implications for Real Estate,” issued today by CBRE Group Research.
Over the last five years, New York City has been home to 1,000 tech start-ups backed by US$2.7 billion in venture capital investment, which has led to information technology jobs increasing 28.7%, making tech the biggest rival to the finance sector’s traditional dominance of the city’s economy. This has been good news for the city’s commercial real estate picture, as CBRE Research estimates that the tech sector fuelled 159 real estate deals in 2011, in comparison to just 74 in 2008.
“By now almost everyone knows that the tech sector is largely responsible for Midtown South having the lowest office vacancy rate in the country, as well as a steadily rising average asking rent, with 21.3% growth from year-end 2009 to May 2012, compared to 13.7% for Midtown and 4.5% for Downtown” said Ben Friedland, executive vice president, CBRE.
“However, with Midtown South availability practically nil, the tech companies are pushing into the Downtown market, and we expect them to be moving more into Brooklyn in the near future.”
The report concludes that vast commitments of private and public investment capital in New York’s technology sectors will prove to be a lasting force in the city. Combined with the tech sector’s desire to cluster with like-minded institutions, the CBRE study sees tech remaining a sttrong force in Midtown South in the short term, exerting upward pressure on Midtown South rents, and increasing its footprint in the Downtown and Brooklyn markets over the longer term.