San Francisco Bay Area Remains Top Market For Tech Talent: CBRE

The San Francisco Bay Area retained its place as the top market for technology employees for the 10th consecutive year, according to CBRE's 2023 Scoring Tech Talent report.

The report found the Bay Area remained the top place for tech talent despite a spate of bad news related to layoffs and slower growth. 

CBRE Executive Vice President Chris Shepherd said a close look at the data reveals a persistently strong technology labor market in the Bay Area. 

“When you look at the data and see where they are actually happening, not a lot of them are actually in Silicon Valley,” Shepherd said. “A lot of the layoffs from tech companies were actually from nontechnical talent.”

The report tracks employment changes from 2017 to 2022, meaning it includes hiring patterns from before the pandemic changed the way many tech companies work. Layoffs have increased in frequency at tech companies, including in the Bay Area, in recent months, with some coming just before the end of 2022 and the trend picking up steam in the early part of 2023.

The tech labor force in the Bay Area grew by about 75,000 jobs from 2017 to 2022, a 23% increase. The Bay Area employs about 400,000 tech employees, according to the report, about 11% of its workforce, slightly less than double the average of the top 50 markets, which is around 5.6%. 

This reliance has often been labeled a weakness by officials, most recently in a report issued by San Francisco Controller Ben Rosenfield that argued the city’s saturation of tech companies has put its budget in a precarious position. 

The controller's report further argues the technology sector has embraced remote work more than traditional sectors, which has had a negative impact on the city’s office market. 

But CBRE Tech Insights Center Executive Director Colin Yasukochi said remote work has also allowed Bay Area tech companies to circumvent housing affordability problems persistent in the region and supplement locally based teams. 

“We believe that the tech industry will generate tremendous job growth in the years ahead and that will benefit the Bay Area and maintain its position as the premier tech hub,” Yasukochi said in a statement provided to Bisnow. 

The CBRE analysis said the present cycle reflects the needs of technology companies for less space, but a higher quality of it. Hybrid work requirements will also mean continued use of office space among tech companies, albeit in a different way than before the pandemic.

And although venture capital funding has dipped in recent months, it reached historic highs in 2021, creating a fresh crop of companies flush with VC cash. Those companies have been in the market for office space in San Francisco, according to Shepherd. 

“There are brand-new companies signing leases for the first time,” he said. 

It is a positive sign for a market plagued by historically high vacancy rates, but the city has a long way to go to regain its pre-pandemic position. San Francisco’s office vacancy rate came in at 31.6% in the second quarter, according to the latest CBRE report.