Wondering where to make your next tech hires? According to a report from CBRE Research evaluating tech talent markets in 50 U.S. and Canadian markets, some of the most concentrated areas of tech talent are also the most expensive cities for businesses to operate in. With higher costs of living and operating a business, these hubs of tech talent demand salaries higher than the national average — but in some cases, the benefits of valuable tech talent can outweigh the costs.
These 10 cities experienced significant growth in tech salaries and workforce over the past five years, boasting the highest average tech salaries 2016. While that’s good news for workers, it’s a tough pill to swallow for businesses looking to hire tech talent; however, the report shows that sometimes it’s worth the cost.
San Francisco Bay Area, Calif.
In the Bay Area, tech wages have grown 14 percent over the past five years, with the average tech salary in 2016 coming in at $123,158, 133 percent more than the U.S. average. With high salaries and rising job opportunities, the Bay Area remains the No. 1 destination for tech worker migration. According to the CBRE report, more than 109,280 tech jobs were added between 2012-2016, compared with 28,804 tech degrees earned in the area from 2011-2015. This “brain gain” of over 80,000 tech workers topped the survey. The report also found that 10.3 percent of the labor force is in the technology industry.
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San Francisco also comes out on top for the quality of tech talent available to employers, but at a high cost. High salaries are necessary to offset the cost of living in the Bay Area, which is 151 percent higher than the national average. Office rent also comes at a premium in the Bay Area, at over $4.6 million per year for a 75,000 square foot office, according to the report. All told, the report estimates a cost of over $57 million per year for an office of 500 employees.
The average tech salary in Seattle was $113,906 in 2016, 123 percent higher than the national average. Tech salaries in Seattle have grown 21 percent over the past five years, faster than any other city on this list.
Seattle is a strong tech market for hiring, with over 62 percent of residents over the age of 25 holding a bachelor’s degree or higher. While graduates aren’t guaranteed to work in the same city they went to school, the data shows that recent graduates are deciding to stay in Seattle, with the millennial population growing almost 17 percent since 2010 despite the fact that the cost of living is 51 percent higher than the national average. And thanks to significantly cheaper office rent ($2.4 million per year) than in the Bay Area, operating an office of 500 employees in Seattle is estimated to cost $8 million less per year than in the Bay Area.
New York, N.Y.
In New York, the average tech salary for 2016 was $108,878 — that’s 16 percent growth over the past five years and 118 percent over the national average. The city has experienced strong job growth in the tech market too, adding 32 percent more tech jobs in the past five years. To compare, sales, admin, operations, finance and marketing jobs only grew by 11.3 percent in total.
New York is an expensive city to hire in, but it’s also an expensive city to live and operate a business in. The average cost of living is 25 percent higher than the national average, while businesses costs are 61 percent higher than the average. Overall, an office of 500 employees would cost over $52 million per year in rent and salaries, according to the report’s estimates, second only to the Bay Area.
In the past five years, tech salaries in Washington, D.C., have grown by only 9 percent, but in 2016 the average tech salary was $108,330, 17 percent higher than the national average. The cost of living in the nation’s capital is 22 percent higher than the national average and it’s one of the most expensive markets to run and operate a business in.
Like Seattle, D.C. has experienced a surge in millennial residents and nearly 57 percent of the population over 25 years old hold a bachelor’s degree or higher. The city has a high concentration of tech workers — nearly 8 percent of the entire workforce is in technology and it ranks in the top three for “value” in terms of hiring. All told, an office of 500 would cost over $50 million in rent and salaries, according to the report.
Tech jobs in Newark have grown over 16 percent in the past five years, while the rest of the labor force has seen less than 4 percent growth. Growing 11 percent in the past five years, tech salaries in Newark are 16 percent higher than the national average at $107,612.
The cost of living in Newark is high — 22 percent more than the national average, but it’s only 7 percent higher for business costs, at less than $2 million per year in rent for a 75,000 square foot office. Unlike other tech hubs, Newark hasn’t seen an increase in millennial workers — growing less than 1 percent in the past five years. Office rent and salaries combined, CBRE estimates an operating cost of $47 million for a 500-employee operation in Newark.
Boston’s tech salaries only grew by 9 percent in the past five years, but in 2016, the average tech salary came in at $103,979 — that’s 13 percent over the national average. Boston also has a high concentration of millennial workers — almost 25 percent of the total population.
In Boston, the cost of living is 19 percent above the national average, which might be why Boston loses a high number of tech graduates each year. Unlike Seattle, rather than staying local, over 19,000 graduates out of 31,000 left Boston in the past five years. Operating a 500-employee office in Boston would cost an estimated $49 million per year, according to CBRE.
Denver isn’t typically thought of as a technology hub — but hiring tech workers in Denver still comes at a high price. In 2016, the average tech salary in Denver was $100,258 — 9 percent more than the national average, with a 20 percent growth over the past five years.
Denver has seen a surge in millennials — growing 7 percent in the past five years. And as far as cost of living goes, it’s closer to the national average than any of the cities at just 9 percent higher. For businesses, it’s cheaper to operate out of Denver at 4 percent less than national average. Overall, a 500-person office in Denver would cost $46 million, when rent and salaries are combined.
San Diego, Calif.
Tech salaries in San Diego might not be run as high as in the Bay Area, but at an average salary of $100,258 in 2016, it’s still an expensive city to hire tech workers. In the past five years, salaries have grown by 13 percent, settling in at 8 percent higher than the national average.
In San Diego, 44 percent of the population over 25 hold a bachelor’s degree or higher. And the cost of living is 26 percent higher than the national average — lower than the Bay Area. For businesses, operating out of San Diego is 12 percent lower than the national average. An office of 500 in San Diego would cost an estimated $45 million in rent and salaries, according to the report.
Orange County, Calif.
In Orange County, the average tech salary was $99,256 in 2016 — 8 percent over the national average. In the past five years, tech salaries in Orange County have grown by 11 percent.
Cost of living is 45 percent higher than the national average and in the past five years the average monthly rent grew by 19 percent. However, the business costs for Orange County average at 7 percent less than the national average, making it a better value for companies. Employing an office of 500 workers in Orange County is estimated on par with San Diego at $45 million.
In 2016, the average tech salary in Baltimore, MD was $98,824 per year — 7 percent higher than the national average, with 12 percent growth in the past five years. Baltimore and Washington, D.C., earned the top two spots for diversity in tech hiring — with a tech workforce of 69 percent males and 31 percent females.
Tech jobs in Baltimore grew by 35 percent in the past five years, compared to 14 percent for every other industry. The average cost of living in Baltimore is 7 percent higher than the national average, while the cost to run a business is 5 percent higher. Factoring in the lower cost of rent in Baltimore, an office of 500 employees would cost $43.5 million per year, almost $7 million less than the same office in Washington, D.C. — and less than other notable cities where tech talent commands lower salaries, such as Houston, Los Angeles and Austin, Texas.