Technology & RE

By Robert Bach, National Director of Market Analytics, Newmark Grubb Knight Frank

Let me take off my green, capital markets eyeshades for a moment and don my pointy, wizard-like economist hat so I can talk about technology. The two are related; for proof, look no further than the torrid property markets in New York’s Midtown South and San Francisco’s South-of-Market, or perhaps the brick-and-timber warehouse down the street from your office occupied by a handful of Internet media start-ups and app designers. I am working on a paper about this and thought I would share a few preliminary findings:

• Employment in technology industries totaled 6.5 million in March, 2014, equal to 4.7 percent of total payroll employment in the U.S. Tech employment remains 9 percent below its March, 2001, peak of 7.2 million at the height of the tech bubble.
• Tech employers have added jobs at only a slightly faster pace than the total labor market in recent years. Since January, 1992 – after the early 1990s recession ended but before the tech bubble began to inflate – technology industry jobs have grown by 30 percent compared with 27 percent in the U.S. overall.
• Growth among technology industries varies dramatically and shows how quickly companies, business lines and technology itself can change. Since January 1992, jobs in computer and electronic product manufacturing fell by 39 percent, a loss of 685,200 jobs as companies moved production overseas. Telecommunications companies employ 121,300 fewer workers today than in 1992, a drop of 12 percent.
• At the other extreme, businesses engaged in computer systems design and related services added 1.3 million jobs since 1992, an increase of 303 percent. The other big percentage gainers are other information services (Internet publishing, broadcasting and web search portals) and software publishers, which grew by 231 percent and 170 percent, respectively. However, the actual number of jobs added between these two categories was less impressive: a combined 332,300.
• One in five Silicon Valley workers are employed in the tech industry, the highest ratio among the 52 metro areas with populations of at least 1 million, and double the ratio in second-place San Francisco. In 52^nd place is Jacksonville, Fla., where less than one in 100 workers is in the tech industry. The biggest surprise in the top 10? Kansas City (think Sprint).

One thing to note is that STEM jobs (science, technology, engineering and mathematics), which total around 8 to 9 million, are dispersed far beyond the technology industries highlighted in this article, which blurs the definition of a technology company. The line between technology companies and the broader economy will fade even further as the “Internet of Things” – the addition of tiny microprocessors into an almost limitless universe of objects – takes shape in the coming years.

* This analysis is based on the following industries in the North American Industry Classification System (NAICS):