Communications of the ACM
'tech Cities 1.0' Report Ranks Silicon Valley's Rivals
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Washington, DC has emerged as the promising U.S. tech city center after San Jose (Silicon Valley) and San Francisco, according to Cushman & Wakefield's inaugural "Tech Cities 1.0" national report.
A dominating hub for life sciences and government, Washington, DC also serves as a significant outpost for tech companies seeking proximity to policymakers as well as for burgeoning cyber-security investment.
The top 25 tech cities were determined by analyzing the concentration of factors such as talent, capital, and growth opportunity — the key ingredients that comprise a tech stew. The heartiest of these tech epicenters are:
- San Jose, CA (Silicon Valley);
- San Francisco, CA;
- Washington, DC;
- Boston/Cambridge, MA; and
- Raleigh/Durham/Chapel Hill, NC.
- Seattle, WA;
- Austin, TX;
- Denver/Boulder, CO;
- San Diego, CA;
- Madison, WI.
Cushman & Wakefield created the "Tech Cities 1.0" report to provide greater insight for its clients and industry stakeholders into existing and emerging tech centers that are driving much of today's U.S. economy.
Ken McCarthy, Cushman & Wakefield's New York-based Principal Economist and Applied Research Lead for the U.S., states that "tech is in everything" and that people would be left behind if they did not adopt technology and change with that technology.
"Basically every company today is a tech company in one way or another. We're all using it, we're using various aspects of tech companies to do various things," McCarthy says. "Whether it's Salesforce as customer relationship management, or Workday for HR, and various other database programs, the old way of doing business just doesn't work anymore."
Report co-author and Regional Director, Northwest U.S. Research at Cushman & Wakefield, in San Francisco, Robert Sammons, says that while it was not surprising to see San Jose (Silicon Valley) and San Francisco continue to dominate, that mass-transit issues and escalating housing costs in those areas have fanned a tech spillover into secondary markets such as Austin (#7), Denver (#8), San Diego (#9), and Salt Lake City (#24).
Remarking on Seattle's number six ranking, Sammons says, "It's certainly one of the biggest, if not the biggest competitor to Silicon Valley and San Francisco. Seattle is an interesting case because it was driven by Microsoft early on, which endures, and now Amazon is huge in the downtown area and it continues to be significant."
He points to tech titan Google, which continues to spread its wings outside of Silicon Valley, for opening operations in Seattle to entice the existing talent pool.
Sammons cites Seattle's cost-of-living as a lingering issue, somewhat mitigated by a recent uptick in residential development that's outpacing San Francisco's, as well as mass transit challenges.
"Seattle has played catchup over the past few years but with housing creation now outpacing that of the Bay Area and with a huge $54 billion transportation initiative that recently passed at the ballot box, it will likely allow it to compete much more aggressively with those markets at the very top of the list."
To many startup and tech community workers around the United States, it may be surprising to see New York (#15) and Los Angeles (#18) so far down the list.
"In the case of New York, when we started to see a growth in tech employment here about four or five years ago, one of the big issues for the companies coming to New York, particularly from San Francisco or Silicon Valley, was a lack of the skilled labor force they needed, particularly engineers," McCarthy says.
"Now what we're seeing in response to the growth in the TAMI [Technology, Advertising, Media, and Information] sector has been an increase in investment by local universities in engineering and tech schools. All the local universities recognizing the need have begun to invest in these areas of education, and as a result you're getting more of a tech-savvy, talented workforce," McCarthy says. "These things tend to feed on themselves, and I would expect that if we did this ranking three or four years from now, it might look a little different for New York."
In terms of Los Angeles, both McCarthy and Sammons note its exceptionally diverse economy.
"Media is important, and you can't lose sight of the fact that historically it's also been an important manufacturing and industrial center," McCarthy says. "There are myriad industries centered in LA, which has a good talent pool, and I would expect that also will come into play as we start to see these things evolve."
"Los Angeles is a market that's just enormous, it's sprawling. And tech, even though it gets a lot of press for LA and Southern California, kind of gets lost in the mix because of media and entertainment," Sammons says. "With Snap and other tech companies centered along 'Silicon Beach' and with media and entertainment becoming even more tech-oriented, LA has nowhere to go but up."
The Tech Cities 1.0 report is available online.
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