As GlobeSt.com previously reported, San Francisco was found to be a top-performing office market in first-quarter 2012—followed by New York City and Houston—with rental rates increasing by 7.5% over fourth-quarter 2011. Demand and rent growth here were found to be driven largely by technology growth—specifically, social media, search engine and cloud computing companies such as Twitter, Zynga, Salesforce, Yelp, Google and LinkedIn, Yasukochi told GlobeSt.com at the time.
Submarkets that saw positive annual rent growth during the first quarter include Vancouver’s Yaletown submarket; Boulder, CO; downtown Pittsburgh; Washington, D.C.’s East End; and the West Loop submarket of Houston, the report indicates. High-tech demand for office space, which has led to rent recovery in many markets adversely affected by the financial downturn, is now spurring construction activity in the office sector for the first time in more than five years.
“We’re now seeing strong evidence of the ‘high-tech effect’ spreading out beyond the five major markets as companies in the technology sector both expand their business models and engage in a vigorous battle to land new pools of talent,” Yasukochi says. “This quest for more human capital is increasingly pushing firms to look outside traditional tech cities to set up new operations.”
Emphasis added. Pittsburgh is among the emerging tech talent markets. Add that to eds and meds, as well as energy. Being inexpensive and awash in Rust Belt Chic doesn't hurt.
The submarket trend for tech talent is indicative of the larger move to geographic arbitrage opportunities. I imagine startups moving from New York City to Pittsburgh, instead of the other way around. Companies are moving to where the talent is produced. You can't bank on brain drain Pittsburgh any longer.