This may be disappointing news for the tablet-toting software buffs that populate San Francisco, but their hometown is no longer the top tech city in the world, according to a new report. It’s being outranked by an East Coast rival, New York.
The northern California metropolis has long held its title, largely thanks to giants like eBay, Netflix, Apple and Fitbit storing their headquarters there. But its high cost of co-working is sending firms and their talent eastward, notes a study from the commercial real estate agency Savills.
Manhattan and Brooklyn already have their fair share of big names in tech, however. The boroughs are home to the likes of IBM, Etsy, Jet.com and Seamless, with Google expanding there as well. But it was Amazon’s decision to put its new HQ2 homebase in Long Island City, Queens, that solidified New York City’s placement at the top of the list.
Savills defines a tech city as being a desirable location for globally-expanding companies that both generates and attracts new employees, and receives large venture capital investments. It looked at several factors in addition to talent pool and office-space pricing when creating the study, such as mobility, wellness amenities and the comfort of working environments.
The survey examined 30 cities around the globe, including Singapore, Tel Aviv, Buenos Aires and Cape Town, which received the lowest score. Beneath New York City and San Francisco in the top five are London, Amsterdam and Boston.
While New York City is more expensive to live in than San Francisco, it’s cheaper to rent a desk in, the firm found. The average cost of shared work space from all the cities included in the report is $590 per month. In New York City, the average price is $950, according to Savills, compared to $1,050 in San Francisco.
Shared and flexible work spaces, such as those offered by WeWork and Knotel, boomed in popularity in the last decade. They are especially favored by tech startups, which grow and change at unpredictable speeds, making their prices a key consideration for the report’s findings.
“Co-working and flexible office space is a great solution for rapid-growth businesses with limited capital or capital that is better placed into fueling their engine, rather than office build-outs,” explained Patrick McGrath, chief information officer and head of client technologies with Savills Studley, the firm's U.S. division. “It also provides a great solution for companies expanding into new markets with ease and without having to make long-term commitments.”
In terms of mobility, London is the easiest city to get around in thanks to its investment in mobile ticketing and the scale and innovation of its metro system, Savills reported. China is also a major contender in the report, with six of its cities making the cut. Topping them is Beijing, which received $34 billion in venture capital investments in the last three years, more than both New York and San Francisco.