Office AND Apartment Rents Matter
There are many factors that influence where to start or expand your business. Business climate, incentives, access to capital, prestige, culture, industry ecosystem, etc… But, talent is the major fuel for a company’s growth. And locations like San Francisco, Silicon Valley, and New York are expensive. San Francisco has gotten so expensive; some tech companies can’t convince employees to move there. So, it’s important to ask, can your talent afford to live where they work?
The Mehigan Company (TMC) is a corporate real estate advisor with offices in the San Francisco Bay Area and Portland so we deal with this issue frequently. Driven by a need to find a productive pool of talent in a cost-competitive location, Bay Area-based companies like Google, Hewlett-Packard, eBay, Salesforce, New Relic, Mozilla, Airbnb, and Vevo are joining a growing number of businesses that are expanding in the Pacific Northwest.
The Portland area has a tech talent pool that is increasing at a faster rate than Silicon Valley. Tripwire, Digital Trends and Cloudability, as well as numerous other startups and corporations in a variety of industries are headquartered in Portland.
Average Class A asking office rents in Palo Alto ($105.23), San Francisco ($72.45), and New York ($67.90) are two and three times higher than Portland ($30.08). Office rent impacts the length of a company’s financial runway and is a major factor when considering where to start or expand a business. (Source: The Mehigan Company)
Cost of Living
But, apartment rent matters too. People play a critical role in a company’s success and cost of living is a major factor in where they choose to live and work. Limited availability and increasing demand has driven up the average one bedroom apartment rents in San Francisco ($3,390), New York ($2,900) and Palo Alto ($2,825), while significantly more affordable options are found in cities like Portland ($1,330) and Seattle ($1,840). (Source: Zumper.com)
In order to attract and retain talent, companies located in more expensive cities are paying higher salaries to compensate employees for the higher cost of living. If talent and money are the fuel for growth, consider the impact of office AND apartment rents before you select a location to start or expand your business.