A hallmark of the current economic recovery is the uneven rate at which different metro areas are recovering, with markets containing clusters of intellectual capital, energy and education (ICEE) industries outperforming finance, insurance and real estate (FIRE) markets in terms of job growth and office demand. Looking at office-using employment, markets with the most educated populations are ahead of the curve, underscoring the importance of the intellectual capital and education components of the ICEE trend.
Among the top 12 metro areas in terms of educational attainment, all but two are not only ahead of the overall U.S. recovery in office-using employment, but have exceeded their respective pre-recession peak levels. The exceptions are Bridgeport-Stamford, lagging due to its high dependence on the financial services industry, and the Seattle-Tacoma area, partially due to thousands of finance jobs lost locally following the collapse of Seattle-based Washington Mutual in 2008. Excluding the financial activities component, office-using employment in Seattle-Tacoma is above its pre-recession peak due to the rapid expansion of the local technology sector.
Strong growth in the technology and/or life sciences industries is driving job creation in most of these markets. However, the importance of local, high-quality educational institutions also is clear. All of these markets have at least one major research university within the MSA or in the region; and markets like Boston, Raleigh-Durham, Washington, D.C., and the San Francisco Bay Area have several. The presence of universities and research institutes benefits these economies in multiple ways, including supplying local companies with a highly skilled labor force as well as facilitating partnerships between the institutions and private industry that foster the commercialization of academic research. With ICEE industries expected to remain major drivers of economic growth through the long term, these and other brain hubs are well positioned to capitalize on this growth.
Andrea Cross is National Office Research Manager for Colliers International. She is responsible for authoring quarterly research reports, white papers and other written analysis as well as speaking at industry events regarding Colliers’ economic and office market outlook.