As tech companies navigate decisions about where to operate, two major costs dominate the equation: employee wages and office rents. A deeper look at the highest- and lowest-cost markets reveals key insights for strategic planning in 2024.
Wages: The Largest Expense
Tech talent comes at a premium, with highly skilled professionals earning more than double the average non-tech salary. Among the top markets:
- San Francisco Bay Area tops the charts with an average tech worker salary of $178,000 annually, approximately $30,000 higher than Seattle, the second-most expensive market.
- In 15 of the top 50 tech talent markets, average tech salaries meet or exceed national averages, with 10 U.S. and five Canadian markets leading the way.
Office Rent: The Secondary Cost
Despite the rise of remote and hybrid work, companies continue to value proximity to tech hubs for collaboration and access to talent pools. This prioritization drives office rents higher in specific areas:
- Manhattan leads in office rent costs, followed by San Francisco Bay Area, Austin, South Florida, and Seattle.
- A typical 500-employee tech company now requires 60,000 sq. ft. of office space, down from 75,000 sq. ft. pre-hybrid work norms.
The Combined Cost of Wages and Rent
Blending wage and real estate costs offers a comprehensive benchmark:
- San Francisco Bay Area again leads, with the highest estimated annual operational cost in 2023 at $81 million. This includes wages and rent for a 500-person workforce housed in 60,000 sq. ft. of office space.
- Other high-cost markets include New York Metro, Seattle, and Boston.
Conversely, the most cost-effective markets for tech companies are found in Canada. While Canadian tech industry wages average 17% higher than those in the U.S., their lower real estate costs balance the equation, providing a competitive edge for businesses seeking lower operational expenses.
How VidTech Can Help
As tech companies weigh the trade-offs of operating in high-cost vs. low-cost markets, clear insights and informed decisions are vital. VidTech supports commercial real estate professionals and investors with custom CRE videos, featuring 4K satellite and drone footage overlaid with key market data. From rent trends to tech talent hotspots, VidTech’s visual storytelling simplifies complex data, helping stakeholders strategize with confidence.
Ready to see your market from a new perspective? Contact VidTech today.
