Silicon Slopes may be king of the Utah technology community, but Salt Lake City has plenty to attract tech companies and their employees

Silicon Slopes — considered by many to straddle the Utah County/Salt Lake County line — is considered Utah’s technology hub. But a real estate economist recently told a crowd in Salt Lake City that the city has plenty of attributes needed to attract tech companies looking to move or expand.

A study by real estate firm CBRE reveals that Salt Lake City characteristics alluring to those companies include a growing, young and educated population; low labor costs; and affordability and strong quality-of-life options for potential workers.

Among comparable cities, Salt Lake City is like Austin in having a population younger than the national average, while Portland’s and Seattle’s are older, and Salt Lake City fares well among those cities for strong growth since 2010 in the key working-age population of 25-44 years old.

“‘We need to be able to hire, which means you’ve got to have the people and then we’ve got to be able to pay them,’” is among the issues posed by companies when considering a city, according to Matt Vance, an economist with CBRE’s Econometric Advisors, the company’s forecasting and data science arm, and also a research director for CBRE’s central U.S. region.

Vance dissected the report during the Downtown Alliance’s annual State of Downtown event.

“We’ve got the people, they’re young, they’re educated, there’s a heavy concentration of tech talent here, and the companies have clearly taken notice.”

Among comparable cities listed in the report are Seattle, Denver, Boise, Portland, Austin and Omaha.

“Yes, when a headline [exists] where the tech tenant/occupier/employer is seeking out a new city, we’re competing,” Vance said.

In addition to being young, Salt Lake City’s population also leads many other cities in the number of technology degrees per capita. “We’re not the top in overall educational attainment, but we are a dramatic outlier when it comes to the concentration of tech talent,” Vance said, noting that Salt Lake City’s per capita figure is more than twice that of Boston’s. “This is something occupiers take note of.”

Downtown Alliance officials said downtown Salt Lake City already has 95 technology companies and expressed an interesting in growing both the number of tech workers and the tech ecosystem there. Vance said being able to hire the right workers matters most to potential newcomer companies, with job growth — like that seen in Salt Lake City’s key working-age group — being the top driver for real estate activity.

“When these major occupiers and employers choose which markets to move into or expand into or relocate to today, they’re doing that because they’re chasing talent,” he said. “Talent is king. It’s in charge.”

But another factor those employers consider is labor costs. “This is a hugely strategic outcome for companies today. I cannot emphasize that enough,” he said.

A tech labor cost comparison indicates that Salt Lake City pays tech workers an average of 5.5 percent less than the U.S. average, whereas tech workers in Seattle get nearly 16 percent more than that national average. Companies balance the costs of labor against office rental rates, with a savings of $1 per hour per employee averaging out to a savings of $16 to $17 in office rates.

“That is office rents in some of these comparable cities, so you can offset your entire real estate expense by saving money on labor by moving your operations or expanding your operations out of a Seattle, off of a coast, into a less-expensive market which has a lower cost of living and necessitates a lower salary for that talent,” Vance said.

The job growth in Salt Lake City has prompted a demand for apartments. Since 2000, 3,596 units have been delivered locally but vacancy and rent growth have remained stable and strong. That means that demand is there, and builders have given people the supply they want, Vance said.

“We keep building residential downtown and they keep filling it up,” he said.

And while prospective companies have their own set of criteria for choosing a particular city, potential newcomer individuals likewise have their own priorities, including quality of life. Utah’s population growth has been driven by net in-migration.

“It’s what’s happening everywhere in the country, particularly off the coasts,” Vance said. “We’re seeing households and individuals make a decision that they can achieve a better balance between cost of living and quality of life by moving off the coast and into one of these high-quality, more centrally located cities like Salt Lake. … There is huge number of people, both already here and moving here, that want the downtown experience.”

Salt Lake City is “very affordable” when compared to Denver or New York City, for example, with rent as a percentage of income being below 20 percent. And the city’s attractiveness has been bolstered by a growing nightlife offering restaurants and bars.

“It is paramount in today’s experiential retail environment that we offer these residents what they’re looking for, which is an 18-hour city … with all of the amenities that these folks look for. And we’ve got it. … This is what they’re looking for. They’re looking for a live/work/play environment.”

Vance also discussed Salt Lake City being a relative leader in the amount of coworking space available to companies. Downtown Salt Lake City offers about 773,000 square feet, or 2.9 percent of office inventory — a high percentage outside of New York City — for companies looking for custom workspaces, flexible private offices and on-demand workspaces.

Still, investors are cautious about high concentrations of coworking space. Short-term leasing is susceptible to economic downturns, which can result in a loss of the tenant base. Investors typically believe a high level of coworking space could reduce the value of their office building, while a smaller percentage can enhance it.

“Coworking is kind of a force to be reckoned with in the office sector right now,” Vance said. “It’s still very niche, but it’s kind of capturing a lot of headlines with folks like WeWork and Regus and other major players.”