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For years, technology firms and startups flocked to Northern California, but according to Jones Lang LaSalle's (JLL's) 2015 U.S. Technology Office Outlook, these companies have started to plant roots in markets across the nation. And over the past year, 73% of the sector's new office leases were expansions, a significantly higher rate than seen for the general office market. In the second quarter, for example, the Chicago-based JLL found that 40% of all office transactions of more than 20,000 square feet were occupier expansions.
With Northern California holding nine of the top 15 most expensive tech submarkets ' led by Downtown Palo Alto at $98.68 per square foot ' tech firms increasingly look for space in metros that combine cheap rents and deep talent pools.
“Technology companies and startups need to look at a full range of options as part of their location strategy,” said Steffen Kammerer, leader of JLL's technology practice group, in a prepared statement. “These companies have to grow. They can still hold a headquarters in the Bay Area, but their offices in secondary or tertiary markets can sometimes support larger staffs or hold just as much strategic importance to their business plans. We're seeing this now more than ever.”
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