According to JLL’s 2016 U.S. Tech Outlook, tech firms are flocking to Texas—Austin and Dallas in particular. With a high quality of life, a relatively low cost of living, access to well-educated millennial talent, a diversified employment base, a low cost of business and land to expand, it’s no surprise Texas is becoming an increasingly attractive market for investment opportunities for technology occupiers and real estate investors alike.
JLL analyzed the top 15 markets for tech leasing between Q3 2015 and Q2 2016 based on square footage leased. Both Dallas (8th) and Austin (7th) fell within the top 10. The report also identifies Austin as a top-ten market for tech employment growth between 2001 and 2015. JLL awarded “Tech Market Scores” to cities across the country based on each market’s economic momentum, talent pool, innovation and cost. It’s meant to help real estate investors quickly gauge a market’s resilience through periods of economic contraction. Again, Texas scored big. Both Austin (3rd) and Dallas (12th) were at the top of the list.
The Texas tech trend is real, and it’s expected to continue. As more tech firms migrate to Austin and Dallas, property managers in those markets are finding creative ways to attract and retain tech tenants.
“The Austin market is an extraordinarily tech-heavy market,” explained Sam Shannon, Senior Vice President of JLL Property Management in Austin. “With tech giants like Google, Facebook and DropBox setting the standard, we find that traditional property management is extinct. Our tenants want and expect a completely new set of building amenities,” she said. “Garage parking and a fitness center no longer suffice.”
David Sansom, Senior General Manager, JLL Dallas, agrees. “With ever-changing and rapidly advancing technologies, the demands of tenants are also changing. Amenities that were once considered luxuries are now expected,” he added.
Electric car charging stations, helipads, private boat launches, cross-tenant networking opportunities, high-end building finishes, large catering kitchens, outdoor gathering places, dog trails, bike paths, game rooms and nap rooms were just some of the examples Shannon cited.
Sansom said services that improve tenants’ work-life balance, such as the ability to book personal training sessions or a car wash at work, are also increasingly popular among tech tenants.
In addition, connectivity is an absolute must-have for tech tenants. A single dropped call, one small dead spot or slow wifi could completely eliminate a building from consideration, Shannon explained.
Sansom elaborated by saying that the nitty gritty of building connectivity wasn’t traditionally something property managers were expected to understand. Today, however, “it is becoming an integral part of our core business. Tenants are beginning to demand more choices when it comes to Internet and VOIP providers, making connectivity a critical component of modern buildings,” he said.
Property managers can therefore add immense value by understanding the needs of tech tenants, communicating those needs to building ownership and then finding creating ways to deliver those needs to building tenants.
“It’s our job as property managers to better position the assets we manage for occupancy, and there is simply no way to do that in Austin or Dallas without deeply understanding the needs of tech tenants,” Shannon said.