Seattle has officially leveled up from a “secondary” tech market to a critical “reinforcer” of the global innovation economy — but the city is running out of room to grow, according to a new report.
The latest edition of commercial real estate firm JLL’s Innovation Geographies report reveals that while Seattle is outpacing traditional hubs like New York and London in talent migration, a shortage of “investment-grade” real estate is creating a bottleneck for the city’s next era of tech expansion.
Seattle lands among 18 so-called reinforcer markets, where it is classified in the report as a “tech powerhouse” alongside cities like Austin, Berlin, and Tel Aviv. Reinforcers also include Los Angeles, Shanghai, Toronto, Washington, D.C., Raleigh, N.C., and others.
While diverse in what makes them attractive, the cities share the common characteristics of much higher rates of net migration, JLL says, having seen population inflows that are 3.8 times higher than the San Francisco Bay Area — the lone “core” city — and eight other “anchor” cities.
The 135 cities ranked in the report are scored based on an analysis of talent concentration and innovation output. While talent concentration measures the human capital and educational pipeline, the output score focuses on the tangible results and financial activity of a city’s innovation ecosystem, such as VC funding, startup activity, R&D spending, and more.
Seattle ranks 12th in innovation output and 23rd in talent concentration. The Bay Area is No. 1 in both categories.
But high-tier hubs are facing a global undersupply of premium, investment-grade real estate that is attractive to innovative companies, according to JLL, which says that only 11% of global office space was built after 2020.
Meanwhile, reinforcer markets like Seattle have seen surging prime rents, averaging $837 per square meter. And while some markets have seen an occupancy recovery, Seattle and others are still below pre-pandemic occupancy highs.
Commercial real estate firm CBRE reported earlier this year that Seattle’s office vacancy reached another record high at 34.7% in Q4. The numbers underscore how hybrid work and shrinking office footprints continue to weigh on a tech-heavy market like Seattle.
In nearby downtown Bellevue, vacancy rates still remain high, reaching 25.4% at the end of last year, according to Broderick Group. But OpenAI signed a big new lease in February, reflecting a growing role for the Eastside in the AI boom.
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