Tech jobs increasing in rising star metros

Tech employment in Sun Belt markets like Dallas and Atlanta is climbing significantly, according to a study by Brookings Metro released in March. Meanwhile, their researchers pointed to signs that a few major tech hubs in Gateway markets have lost some ground when it comes to job growth and business starts, with the shift beginning around the time the COVID-19 pandemic hit the U.S.

Tech jobs have for years been largely concentrated in a handful of “superstar” markets like San Francisco, San Jose, New York, Boston, Washington, D.C., Seattle and the Sun Belt market of Austin. In the years just prior to the COVID-19 pandemic, most of these markets grew their dominance on the tech scene, garnering a greater share of tech employment nationwide from 2015 to 2019. Only New York, Boston and Washington, D.C. were beginning to lose ground during that time, in terms of their share of national tech employment.

Around the same time, prior to the pandemic, the Brookings researchers noted some “rising star” metros were emerging, including the Sun Belt markets of Dallas, Atlanta and Orlando.

Once the coronavirus pandemic took hold, several Sun Belt markets increased their share of the U.S. tech job market, Brookings Metro researchers noted, with Dallas, Atlanta, Nashville, Charlotte and Austin adding jobs at a rate higher than 3%.

The chart below demonstrates the growth in tech sector employment in several major Sun Belt and Gateway markets. It is notable that the average rent in Sun Belt markets is much more affordable on average, which could be a strong draw for tech companies and their workers to those markets.

Tech sector employment by metro

The study illustrated that the pandemic ushered in “unmistakable” shifts in “tech geography”, with growth slowing in Los Angeles and turning negative in Chicago and Boston. While tech growth slowed in some “rising star” metros during the pandemic as well, some Sun Belt markets saw tech employment accelerate in 2020, such as in Nashville, San Antonio and Charlotte.

Further supporting this view, recent job posting data from EmsiBG also suggests shifts in tech employment away from some cities and into others. In addition, data on new tech firm starts, available from Crunchbase, also points to slumping numbers in “superstar” metros from 2020 to 2021. Tech superstar Austin has continued to see surging tech job postings, while job postings in San Francisco, San Jose and other established tech hubs have slipped downward.

Jobs in tech, such as software publishing, computer and component manufacturing, data processing and other related industries are an employment segment worth paying attention to because jobs in these areas typically garner higher-than-average wages, strengthening the economy in their given markets. A significant number of these workers, we believe, will likely choose to rent in high-quality apartments which remain affordable to their household income. If these workers reside in a Sun Belt market, the likelihood of lower rents would certainly be an additional benefit compared to those in Gateway markets.

CONTI believes the country has been experiencing a Sun Belt migration and the pandemic has only added momentum to this trend. As businesses and workers relocate to more tax friendly and affordable areas of the country, it is not surprising that migration numbers include tech jobs and the workers that fill them. Based on trends the Brookings study are uncovering and the ongoing analysis our team performs in markets across the country, we believe the growing attraction to rising star metros will continue into the foreseeable future.