New York vs Silicon Valley: what’s cheaper for a tech company?
Mayor Michael Bloomberg about a decade ago declared a mission for New York to surpass San Francisco and Silicon Valley to the south as a global hub for new technologies. New York has established itself as the second cheapest in the world in attract the venture capital that feeds the industry. But the gap between n ° 1 and n ° 2 remains important. Bay Area and Silicon Valley startups landed $ 24 billion from investors from April to June, according to CB Insights, compared to $ 11 billion in New York.
The large population of skilled engineers in the Bay Area has led CBRE to re-name the cheapest region for employers looking for tech talent in this year’s “Scoring Tech Talent” report, released last week. . About 375,000 are in tech-related jobs in the Bay Area, compared to 340,000 in New York.
But in that report, a chart showed New York City had an overall operating cost advantage over its West Coast rival. Costs for tech talent and office rental in New York increased 13% since 2017, compared to about 20% in the San Francisco Bay Area, according to CBRE data.
The average annual wage cost for skilled employees and non-tech workers (like sales and marketing) was $ 41 million in New York City last year, compared to $ 50 million in San Francisco.
The difference in salary costs makes up for the fact that New York City has slightly higher real estate costs: about $ 5.7 million per year for 75,000 square feet of office space in Manhattan, compared to $ 5.2 million in Manhattan. Bay Area.
Rents are based on year-end 2020 research by CBRE, factoring in discounts of office owners during the pandemic.
But the difference in operating costs for businesses can make New York City less attractive to the skilled workers that tech companies need. New York tech workers spent about 26% of their $ 118,000 salary, on average, on rent last year, according to CBRE. Workers in San Francisco paid 21% of their average $ 144,000 in rent. The CBRE report noted that San Francisco outperformed New York City in attracting new workers, as measured by growth in tech employment relative to local tech graduates.
Seattle and Washington DC were the next most expensive North American markets to operate, according to CBRE, costing $ 56 million and $ 55 million annually, respectively.
See part of the 2021 list below: