Tech Industry Demand Thrives in Detroit & Pittsburgh [New Research]

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By: Dave MacDonald, Executive Vice President, JLL 

Silicon Valley and San Francisco may be the strongest tech hubs in the country, but smaller markets are making their mark on the map.

In fact, two secondary markets in the Great Lakes, Detroit and Pittsburgh, made JLL’s list of “sweet spots” for young companies. Other cities on the list include the likes of Orlando, Raleigh-Durham, Milwaukee and Phoenix.

How did JLL determine the “sweet spots?”

In this year’s annual Technology Office Outlook, JLL unveiled its proprietary tool, the Locator Matrix. As defined by JLL, the locator tool helps growing startups and established tech firms determine the best location for company expansion. Based on cost and startup momentum, the tool ranks markets into four quadrants.

Below, I’ve included a sneak peak of the matrix. Download the full report for further explanation and recommendations.


Tech Leaders Look to Hometowns for New Office Space

In the Great Lakes, smaller markets like Detroit and Pittsburgh are capturing more tech market demand than ever. According to JLL, “…more and more startup founders consider the viability of their hometown as a business location instead of relocating to San Francisco.”

The appeal? Lower real estate and employee costs, plus affordable cost of living.

However, the window of opportunity to capitalize on the competitive advantage in these markets won’t last forever. As the economy continues its upward climb, more and more companies will compete for the same talent, ultimately driving wages up.

And, another factor increasing costs, the preference for creative, open space extends beyond the tech space now. Most companies want the ‘Google factor’ … not just tech. Hence, organizations in the financial, professional and business services industries are hunting for the same creative workspaces. Tenants and investors can expect to see creative office rent increase within the next 12 to 18 months, reducing negotiating leverage for tenants.

Detroit and Pittsburgh: In The Sweet Spot

Featured in the Locator Matrix, Detroit and Pittsburgh are sitting in what JLL experts named “the sweet spot for young companies, especially those with cost top of mind.”

In these markets, real estate costs and talent are still affordable, especially in comparison to competing markets like Denver, Austin and Raleigh-Durham. But, it’s more than that. Take a closer look at what’s happening in Detroit and Pittsburgh. 

Detroit Rebounds With Tech Innovation

New startups are transforming the local marketplace. One company in particular recently made an infrastructure update that could be potentially groundbreaking for the local economy.

Startup, Rocket Fiber, built a gigabit internet fiber ring through Downtown Detroit. Low-cost, high speed internet will “attract more companies, spur innovation and help Detroit take a giant leap forward after bankruptcy,” according to the report.

Below, I’ve included a breakdown of Detroit’s current tech climate:Detroit

Pittsburgh Attracts Big Name Tenants

Changes in Pittsburgh’s corporate landscape, paired with a robust development pipeline, will offer new space options for tenants in tech. Both downtown Pittsburgh and the Oakland/East End submarket can expect to witness significant tech growth in the 18 months ahead.

Recent lease transactions in Pittsburgh include tenants like Google, Uber and NetApp Inc. For more information, check out the breakdown of Pittsburgh’s current tech climate.


For more information about the law firm market in your city, download the full 2015 Technology Office Outlook.


About the Author 

daveDave MacDonald is Executive Vice President in the Detroit office of JLL. With 20 years of commercial real estate experience, Dave  specializes in acquisitions and dispositions of  office and industrial properties.  View Dave MacDonald’s bio or connect with him on LinkedIn