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Winter 2015 Insights: TECH TRENDS

Colliers International has released their property magazine, Knowledge Leader: Winter 2015. Inside, we get great insights of national and international trends, market activity and real estate developments.

The main theme worth taking notice in Winter 2015 is DIGITAL TECHNOLOGY. Tech is rapidly redefining companies, their success and the business landscape itself. As the Letter from the Editor states “technology continues to transform our surroundings and interactions.”

I’ve taken some of the top themes and outlined them below with a focus on what they mean for the Raleigh market and what Raleigh business owners need to be on top of for the future (click here to read the entire Knowledge Leader).

Tech Companies’ Influence on Commercial Real Estate:

Throughout most US markets, tech companies have become the hot business and tenant pursuits for office space developers and commercial real estate professionals. From startups to international giants like Google and Facebook, tech firms of all sizes are demanding different office needs and environments than your business is probably use to renting or seeing. For this reason and more, look out for the following:

Tech startups are a boom or bust group (majority boom) concerning expansion. Although most tech firms are down to one desk per 150 SF of space, with less emphasis on offices, the space requirements of growing tech companies will still have an impact. A neighboring tenant now with a small office may in 6 months tripled their employee count and look to take over the entire hall where your business is.

  • For your compass – If you are a neighbor to a tech firm, make sure your lease has right of first refusal on any space you may be wanting on you floor for expansion. Your tech neighbor may take it from under you if not. They may outgrow the building, so try for an expansion right on their suite if you know your techie neighbor is planning to explode in the next year or so.

The Rise of Tech Hubs and Intellectual Capital Cities:

Tech companies are paying out the roof for amenities and employees. Google for instance doesn’t worry about the cost of real estate. The main expenses are amenities and common area centers, full with kitchens, yoga classes and free massages. Why you ask? Because, as Colliers Exec Chris Zlocki says “the war for talent is on” and tech firms are all competing for the same people and same demographic.

  • For your compass – By 2020, millennials will be more than 50% of US workforce. VALUE (driven by employees) will take over COST as the new mantra for 2015. With that said, new local tech hubs will attract tech firms priced out of leading markets like Silicon Valley and San Francisco. This means RALEIGH is one of the next tech hubs.

The “Cloud” will demand more ground space:

Most people don’t know what the cloud is, they just see the results: files on their laptop linked to their phone, dinner reservations made on their mobile device, etc. But behind your tech mobility are warehouses and centers full of servers and computers powering your world. These Data Centers consume immense amounts of power and electricity to cool the machines and keep your life connected.

  • For your compass – Rural areas are especially appealing for data centers (cheaper power and water as well as more real estate space). And where there is one data company, more follow. North Carolina happens to be over 60% rural, so expect more developments like the Duke Energy powered data center near Charlotte to start popping up around Raleigh. Even old warehouses are being converted to serve downtown tech companies (can you say Red Hat and Citrix data centers in Downtown Raleigh?!)

Enjoy these thoughts for 2015! As always, whether you are debating a new lease, purchase, relocation or development opportunity let Capital Compass know!

- Capital Compass

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