Millennials are supercharging the 2022 Housing Market, right? Wrong according to data from the US Census. In fact, Millennials are BOYCOTTING the Market.
The Tech industry is the fundamental driver of growth across the United States, adding nearly 2 million jobs to the country’s economy over the last decade. Those jobs represented a nearly 50% increase from 2010 levels, by far the highest growth rate for any prominent occupation.
Of the 100 largest metros in the country, only two – New Haven, CT and Albuquerque, NM – experienced a decline in tech workers. Meanwhile, 80 metros increased their tech employment by over 25% and 40 managed to eclipse 50%.
Based on this all-encompassing growth most cities – or, more specifically, real estate owners within these cities – have started to call their home a Tech Hub. While that might be technically accurate (tech is the driving force for growth in most cities), such widespread use of the term has dilluted its true meaning.
Cape Coral, FL led the way in tech job growth since 2010, more than doubling its metro tech employment from 2,200 to 5,200 (134%). Is Cape Coral now a Tech Hub because of that? And are they likely to top the list again in 10 years? Probably not.
The low-hanging fruit for tech job growth – think database managers, data analysts, and systems developers for schools, hospitals, and government – has largely been picked. To reach similar levels of tech job growth in the future city’s will need to foster a strong startup and innovation cluster.
A good barometer of this cluster strength is tech’s share of the local workforce. The higher the share, the more entrenched tech is within the local economy.
The cream of the crop is San Jose, with roughly 12% of its workforce in tech. That’s by far the highest of any metro and 3x higher than the US average of 3.7%. Well-known Tech Hubs such as Washington DC, Seattle, San Francisco, and Raleigh round out the top of the table, all with tech employment shares north of 7.0% or greater. Some smaller markets like Provo, Manchester, and Des Moines also rank highly.
The growth of a Tech Hub acts as a virtuous circle. The stronger it becomes, the more productive its workers and companies become. This increased productivity results in higher wages and company valuations, drawing even more tech workers and companies into the region. As this occurs Venture Capital firms will start paying more attention to local startups, providing increased capital and mentoring to the region’s tech sector.
This brings us to the second barometer of Tech Hub strength – Venture Capital investments. The job of VC firms is to invest in startups that have the highest chance of succeeding. With success comes employment growth, wage increases, and potentially an IPO if everything goes right. Each of these startup success factors is a massive boon for the local economy.
The Bay Area is the America’s unrivaled Tech Hub, with VC investments per capita at least 4x higher than anywhere else. While growth in the Bay Area is fighting against headwinds such as high cost of living, homelessness, and congestion, its innovation cluster will produce economic growth well into the future.
However, there are other areas of VC intrigue. The Provo / Salt Lake region, as Durham / Raleigh, each measure highly. Boulder, despite its small size (population of 300k), packs a large startup punch. Perhaps Trenton, a city which has experienced population decline for six straight decades, is ready to turn the corner on the back of its startup scene.
Based on all of that, which markets are legitimate Tech Hubs? Below is Reventure’s list:
- Mega Hubs
- San Francisco/San Jose
- Secondary Hubs
- Washington DC
- Salt Lake/Provo
- San Diego