Tuesday, October 4, 2022 Oct 4, 2022
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CRE Opinion

DFW’s Tech Workforce Fuels Economic Growth

Bob Mohr, founder and chairman of Mohr Capital says the sector is fueling leasing activity locally.
By Bob Mohr |
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When it comes to Texas and technology, people invariably think of Austin. And while it’s true the Capital City attracts a lot of tech talent and tech companies, it’s a mistake to overlook Dallas-Fort Worth, which is a tech hub in its own right.

Consider this: 14 Dallas-area companies ranked in Deloitte’s 2021 Technology Fast 500, an annual ranking of the fastest-growing technology, media, telecommunications, life sciences, fintech, and energy tech companies in North America. Only 10 Austin companies made the list.

Technology is fueling DFW’s economic engine. As more companies in the metro hire tech talent to expand their business, the impact is rippling throughout DFW’s real estate markets, generating demand for housing, retail, industrial, and healthcare properties.

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Bob Mohr is founder and chairman of Mohr Capital. Courtesy Mohr Capital

Is every company a tech company?

In DFW, tech employment is dispersed among a wide range of industries, from financial services to e-commerce. Moreover, the lines that define technology are blurring. Today, a vast majority of companies could be considered technology firms, based on the critical role technology plays in their operations.

For example, most people would agree that Texas Instruments is a tech company. It is expanding in North Texas with plans to build up to four new manufacturing plants in Sherman. The 300-millimeter semiconductor wafer fabrication plants could result in a potential $30 billion investment from TI. They could also support as many as 3,000 jobs once complete.

But what about Charles Schwab or Walmart? Though Schwab is a well-known financial services firm, it is adding 180 tech-specific roles in North Texas to handle the influx of new brokerage accounts it has seen during the pandemic. It already employs more than 5,100 people across DFW including 2,800 at its Westlake corporate campus.  These new jobs are part of the company’s push to hire 700 tech positions nationally.

Walmart, of course, is a bricks-and-mortar retail behemoth. But you can’t ignore that e-commerce is a massive part of its business, nor can you ignore that its supply chain and logistics are tech-driven, too.

In DFW, Walmart is building a 1.5 million-square-foot automated fulfillment center and a 730,000-square-foot automated grocery distribution center. Together, the facilities will create about 1,000 full-time jobs across the region, with 40 percent of the openings being technical positions requiring STEM skills, according to the Arkansas-based retailer.

DFW ranks as top tech labor market

Tech companies are attracted to areas where they can source talent, so it’s no surprise they’re expanding in DFW. The metro tech labor pool is the sixth-largest in the nation with 189,200 workers, according to CBRE’s 2021 Scoring Tech Talent report.

North Texas ranked 13 out of 50 U.S. and Canadian tech markets, and the number of tech workers has increased by 16 percent. (Austin is the only other Texas market in the top 20, coming in at number 7.)

Moreover, the report highlighted DFW as a top migration market for tech talent behind San Francisco, Seattle, and Toronto. The region also ranked in the top 10 for tech degrees, which means the region is well-positioned to supply tech talent to technology employers.

For example, UT Dallas recently announced it will open five new research centers, as well as an extension of its Venture Development Center. The center is in Richardson’s Innovation Quarter, a 1,200-acre industrial area east of Central Expressway that local officials hope to transform into “the premier tech hub in Texas.”

Tech drives leasing activity

Nationally, the tech industry is leading the economic recovery, from job growth to office demand. Employment in the U.S. technology sector increased for the 12th consecutive month in November, a positive sign in an otherwise slightly disappointing report on the nation’s labor market growth, according to IT industry nonprofit CompTIA.

On a statewide basis, technology-related employment in Texas is poised to accelerate in 2021 and could approach 1.1 million workers by year’s end. Last year, Texas added an estimated 11,862 new tech jobs, more than any state.

The New York, Washington, Dallas, Los Angeles, and Chicago metropolitan areas had the most open positions in November. A third of those positions required skills in emerging technologies including artificial intelligence, data science, and DevOps (the union of people, process, and technology to serve customers).

The expansion of tech companies and tech employment is powering leasing activity in the office sector both nationally and in DFW. Tech companies claimed a 22% share of U.S. office leasing activity in Q2 and Q3 combined, up from 17% for all of 2020, according to CBRE’s 2021 Tech 30 report.

Earlier this year, office sublease space and direct vacancies were at an all-time high in most major markets across the U.S. In North Texas, the office sector stood in stark contrast to the industrial sector, which saw vacancy rates fall to historic lows.

But the growth in the booming tech sector is fueling the next comeback for office use across the metro. As of early December, 38% of office leasing activity in DFW was technology-related. That’s more than double the leasing activity in both Q2 and Q3. As organizations increase their tech headcount over the next three years, demand for office space will increase as well, followed quickly by rental rates. Hence, executives, regardless of whether they lead tech companies or tech-driven companies, should plan now for their future office space needs.

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