Big tech is taking off in NoVa
The West Coast has been leading the tech expansion cycle with social media, e-commerce and apps, but a shift is underway. As the tech cycle diversifies into more complex fields like cybersecurity, cloud computing and predictive analytics, Northern Virginia is taking the lead.
What’s going on out west?
The West Coast has seen tremendous tech growth this business cycle. According to JLL research, Seattle, Silicon Valley and San Francisco, three of the largest West Coast markets, reached a combined 44.8 million square feet of net occupancy growth, leaving limited quality space available and causing a spike in rental rates. And while the tech boom has wiped out unemployment across the West Coast, tech giants are facing severe talent shortages, making it difficult for them to maintain this rapid rate of growth.
Along with talent shortage issues out west, big tech is diversifying into more complex sub-sectors. As tech giants look to grow in these fields, Northern Virginia is an obvious choice. NoVa’s economy has been directly tied to government contracts historically, and thanks to federal spending priorities this decade in cloud computing and cybertechnology, it has quietly emerged as a hub for these new fields.
The region’s concentration of federal agencies is a major draw for tech firms. JLL research shows that companies in the Dulles tech corridor already have 37 percent share of all federal technology contracts, and as federal spending on cloud computing and cybersecurity increases so will the region’s portion of federal deals, says Kelly Katz, executive managing director, JLL.
In addition to federal investment, Northern Virginia is a massive magnet for technology companies because of its highly skilled workforce. “The region offers one of the nation’s strongest and deepest tech talent pools,” says Katz. With government contractor employers who already specialize in technology tools and more than 60 nearby higher education institutions filling the pool with qualified employees, “Northern Virginia will likely see a strong uptick in demand looking to capitalize on this talent.”
The region has already seen this with startups like Verodin, a firm that created the first and only platform built to assess whether a company’s cybersecurity tools are doing their job. Verodin began operating in Reston, Virginia, while most of its employees were based in California and Texas. When it came time to plant their headquarters flag, they chose Northern Virginia because of its security talent and proximity to government agencies. “Our business relies on excellent talent and so attracting world class talent is critical,” says Ben Cianciaruso, chief operating officer at Verodin.
Today, Northern Virginia has almost 70 percent of the 28 million square feet of occupied technology office space in the Washington, D.C.-Maryland-Northern Virginia market. And more development is on the horizon. “Looking forward, 73 percent of future occupancy gains will be driven by tech,” Katz says, “with neighborhoods west of Tysons Corner offering the best proximity to (tech) talent, primarily along the Toll Road and into Loudoun County.”
While Northern Virginia has prominent tech specialties, there is plenty of variety within the tech market. “What excites us is the diversity of employers,” Katz says. “It leads to more stability when you’re not depending on one type.”
For more information about Northern Virginia and what you should know for 2019, download JLL’s 12 stories forecast here.
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