By Adam Ruggiero and Sultane Cosaj
The growth of technology companies has produced strong demand for highly educated workers, and the real estate markets where they can be found have been among the nation’s best performers throughout the current cycle. Home to large numbers of experts in the fields of science, technology, engineering, and mathematics (“STEM”), assets in markets like Boston and San Francisco have consistently produced industry beating total returns. These strong returns have been driven by surging real estate demand as rising employment and outsize wage gains have boosted consumer spending and increased the need for housing and office space. The core tech markets, however, have not been the only beneficiaries of strong demand for STEM workers. A number of other tech hubs have emerged, often specializing in fields such as defense, media, or robotics. As these new entrants reshape the landscape of American industry the phrase “tech markets” itself may soon become outmoded, replaced by references to individual industries. Markets where STEM workers remain a small portion of the employment base have also benefited from the spread of tech jobs to industries where technology previously played a minor role. The net benefit to investors is a new generation of markets with positive long term growth factors that offer the ability to diversify beyond the traditional tech markets and develop focused investment strategies for specific STEM-driven industries.
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