There is a gap of about 5,300 between the number of tech degrees earned in Greater Philadelphia and the number of tech jobs added in the past five years, according to a new report from CBRE highlighting the ongoing challenge to keep students in the region.
The 2023 Scoring Tech Talent Report ranks Philadelphia No. 16th in the U.S. and 22nd in North America for its tech pipeline. That's the same ranking it held last year in the report that analyzes 50 metro areas across the continent. San Francisco, Seattle and New York topped the list.
As Greater Philadelphia's universities — such as the University of Pennsylvania and Drexel University — continue to churn out talent, the local tech economy is charged with creating jobs to keep recent graduates in the region.
The Philadelphia region saw 31,108 students graduate with tech degrees from 2017 to 2021, but added 25,740 tech jobs from 2018 to 2022 as those students entered the workforce. In the same timeframe, the population of 20-somethings dipped by nearly 6%, while 30-somethings increased by 10.5%.
Scott Miller, an executive vice president for CBRE based in Philadelphia, said those numbers speak both to the vitality of Philadelphia-area educational institutions, but also the need for a more vibrant tech economy.
"We're the sixth-largest city, but if you look at the numbers [in the report] we're 22nd for tech talent, so there's a lot of room for us to graduate up," Miller said.
Layoffs in the tech sector both nationally and locally have underscored much of the past year, but as companies regain their financial footing in the industry, Miller sees an opportunity to retain more recent graduates interested in tech.
"Hopefully as the purse strings loosen in the financial community, that will enable more companies to create those positions to keep those folks here in Philadelphia," Miller said.
Though Philadelphia ranks below the likes of mid-Atlantic and Northeast counterparts like New York (No. 3), Washington, D.C. (No. 4), Boston (No. 7) and Baltimore (No. 17) for overall tech talent, the region again presents itself as a more affordable East Coast option. In Philadelphia, to run a 500-person tech firm in 60,000 square feet of office space, it would cost almost $52 million annually, according to the report. That's more than $20 million less than in New York, $18 million less than in D.C. and still $1 million less than in Baltimore.
"We're markedly less expensive," Miller said. "We graduate more folks than we actually have jobs. So there's plenty of opportunity to graduate and grow the tech talent."
On the real estate side, rent for tech office space sat at $31.34 per square foot as of the fourth quarter of last year.
As tech talent has grown in the past five years, tech wages in Philadelphia are up 17% in that time span to $105,151, a quicker pace than non-tech occupations at 14%, according to the report. A relatively low cost of living can also be an attractive factor for recent graduates, Miller said. At an annualized average rent of $21,615, the typical tech worker spent about 20.6% of their salary on rent.
"If you look at all the numbers, you look at the low cost of living, you look at the low cost of occupancy in the city of Philadelphia, it would enable a tech employer to grab a great level of talent at a fraction of what it might cost in some of the more expensive communities," Miller said.
