Jan 19, 2017, 3:19 PM
2016 Tech Outlook - Philadelphia
Low occupancy costs compared to other major tech markets and a high quality of life in the CBD are making Philadelphia’s tech market more viable than it’s ever been.
Anchor institutions like Comcast continue to capitalize on these favorable trends by working with major developers to build innovation districts with the goal of attracting and retaining top tech tenants. Though national competition remains fierce, Philadelphia could be on the verge of a major tech boom.
Key stats as of Q2 2016
|Average asking rent (per square foot)||$24.43|
|12-month rent growth||+2.1%|
|Employee cost (average wage 2015)||$102,798|
|% of population with bachelor's degree or higher||35.3%|
|Share of Millennials||20.8%|
|Change in tech employment YoY||+1.0%|
|VC funding (Q3 2015 - Q2 2016)||$119.9M|
|Average monthly apartment rent||$1,248|
|Urban core premium||+53.8%|
Where there’s opportunity
- Favorable demographics: Over the last decade, the city’s added more than 135,000 millennials. That growth rate’s the fastest among the 10 largest U.S. cities, and today 29% of the city’s population consists of millennials. Fortunately for tech companies, these aren’t just any millennials—they’re smart ones. Education levels have jumped more in Philadelphia than in the rest of the country’s 10 largest cities.
- Local industry
support: Longtime Philadelphia institution, Comcast Corporation, is
undergoing an ongoing expansion and diversification in the tech space that should
fuel further growth in the CBD, particularly as its 1.3 million square-foot Technology Center comes online in Q1 2018.
On the heels of Comcast, international tech staffing firm Frank Recruitment has begun hiring 250 new employees to man its Philadelphia office, perhaps providing an early example of the so-called “Comcast effect” landlords hope to experience for years to come.
- Quality-cost ratio: Low occupancy costs compared to other major tech markets, and a high quality of life in the CBD, is helping better position Philadelphia in attracting potential tech tenants.
Where there are challenges
- Fierce competition: The
local healthcare IT, medical and life sciences, and media technology industries
all seem positioned for robust growth.
However, intense competition between cities and regions for talent and tenants mean that aggressive growth is by no means assured. Philadelphia must remain committed to improving both its business environment and lifestyle amenities to ensure that attraction and retention continue.
- A lack of major tech-centered
players: The region’s tech startup scene continues to mature, but a local
answer to one of Silicon Valley’s big names remains elusive with no major exits
by firms on the consumer tech side, either via acquisition or IPO.
Want more? Download the complete 2016 Philadelphia Technology Office Outlook.
See how other markets stack up in the 2016 Tech Outlook:
Or check out the full national 2016 Tech Outlook.
Research: Clint Randall | Editor: Michael Cronin