When you think of regions in the United States with a strong tech sector, Silicon Valley likely comes to mind. Nestled in the San Francisco Bay Area, it’s earned its reputation as the global center for technology, social media, and innovation. But tech is thriving elsewhere, in both expected and unexpected places.
Cities like Denver and Chicago represent a prime opportunity for investors seeking the market boom that comes with growth in the tech sector. With the introduction of 5G networks, investment in IoT and rising interest in smart devices, the trajectory of technology is clear, and it’s heading in a positive direction.
So what’s the takeaway for those in real estate? We’ll touch on three cities enjoying a real estate boom from the tech sector, and show you some the best markets in the U.S. for housing investments.
1. Denver, Colorado
Denver has risen to a top 10 market for tech talent, according to CBRE’s annual Scoring Tech Talent report. Among 50 U.S. and Canadian markets, the city has shown incredible promise, with companies opening new offices, hiring employees and expanding their operations. This has appealed to a younger demographic.
With the increasing availability of jobs in tech-related fields – and the growth of the tech labor force by 23.8 percent over the past five years – Denver has attracted and retained a large millennial population with a high median wage. This has great promise for real estate investors, who can trust that rentals in the city will be popular for some time.
2. Chicago, Illinois
Chicago launched a citywide tech strategy in 2013, and it’s clearly finding success. Tech companies like Gogo and OneSpan Inc. have moved their headquarters to the city, and more are expected to follow. The Innovation Cities Index 2018 ranked Chicago sixth in the United States. This commercial real estate boom has provided opportunities for the rental market, too.
Property investors can look for a great return on investment. The average rent of a one-bedroom apartment in Chicago was $1,712 in 2017, a 15% decrease from the year before. Without the skyrocketing rental growth coastal cities are seeing, it’s easier for real estate investors and renters alike to enjoy this booming market.
3. San Diego, California
Recent trends in San Diego’s real estate market indicate its profitability for tech-focused investors. The median sales price in the city’s office sector increased by nearly 230 percent between 2014 and 2017, and median sale prices of multifamily properties have grown every year since the recession.
While San Diego isn’t on par with San Francisco’s expansion, the area’s STEM-oriented infrastructure and massive millennial population growth rate show considerable potential moving forward. And it’s a safe bet for investors, as the city saw a 95.4% occupancy rate in 2015 and has only been growing since.
Investing in Tech Cities
The thriving tech sectors of Denver, Chicago, and San Diego are appealing to real estate investors – and for good reason. As more tech startups and top talent move to these areas, they’ll see growth and improvement. Over time, investments in these markets should see growth.
This post was provided by Holly Welles, a real estate writer covering real estate investments, market trends and millennial experiences. She is the editor behind The Estate Update, and you can connect with her on Twitter to find more of her work.