SMALL CITIES ARE BIG HITTERS FOR TECH INDUSTRY
London, New York and Singapore leaders for business environment
February 25, 2015 – Austin, San Francisco and Tel Aviv are the top ranking cities for tech companies, according to a report by international real estate advisor Savills. Proving small cities are big hitters on the global stage.
The Savills Tech Cities research programme aims to understand the many diverse drivers that make good cities for the tech sector. The firm has identified the 12 global centres at the forefront of tech. All have thriving and growing tech industries and are at the top of global shopping lists for tech companies looking for space in which to locate. Access to human capital is a key driver in locating tech firms, and vibrant cities are where the talent wants to live and work – factors ranging from access to venture capital through the quality of a flat white available at the neighbourhood café are all included in the metrics.
The firm finds that whilst the big global centres come up strong for business environment, with New York, Singapore and London as leaders due to their good regulatory environment, access to Venture Capital and investors as well as excellent links to other key global cities are key. However, Asian centres dominate when looking at the tech environment, with the exception of Stockholm. Taking into consideration IT skills, tech regulation and infrastructure, Hong Kong, Stockholm and Singapore rank highest – Singapore has the fastest broadband speed at 100 Mbps. But it is interesting to note smaller cities such as Austin, Dublin and Berlin in providing affordable accommodation near to the city centre, a lesser level of pollution and access to restaurants compete to attract this demographic alongside the megalopolises.
In fact, smaller cities with their significant creative population offer some things that mega cities just can’t. City living on a smaller footprint can give residents shorter commute (Savills finds the average commute for tech cities employees is 31 minutes), accessibly by bike, easier to access amenities and a better work/life balance – but with all the buzz of larger urban centres. Austin has also seen recent population growth, GDP growth, and house price growth – its stand out economic growth rivals the bigger cities and the median average age is only 31 years.
Paul Tostevin, associate director of Savills world research, says: “Austin’s South by South West (SXSW) festival brings together film, music and tech, whilst Dublin’s Web Summit is Europe’s largest tech conference – these vibrant mixed use communities are at the centre of the new tech industry spirit.”
Looking at property costs, Savills overall index gives a lesser weighting to this factor. For a small tech company with financial backing, securing the right space in the right location is more important than cost. Combining office and residential costs, the firm finds Mumbai the most affordable at £12 per sq ft for office rents with Singapore, London and Hong Kong all above £55 per sq ft for an established office location and ranging between £20 and £58 per sq ft for a ‘scale up’ (small tech company with capital backing).
Jon Hutt, head of corporate real estate at Savills UK, says: “Location decisions are predicated on far more than simply the cost of property and in today’s world it is fundamental that companies look closely at how they retain their existing talent pool, attract new talent and keep themselves ahead, in what is an increasingly competitive employment market. The nature of their space, the areas in which they locate, the quality of life that they can offer their teams and the access they have to talent, as they grow, significantly outweigh saving a few dollars on rent. This applies to all companies but for the tech community in particular it is crucial.”