Booming, Busting Business

By Wagner, Karen L. | Journal of Property Management, May/June 2007 | Go to article overview

Booming, Busting Business


Wagner, Karen L., Journal of Property Management


The rise, fall and resurgence of high-tech companies in South Atlantic impacts office real estate

During the technology boom of the late 1990s some areas of the country were like dot-com magnets - attracting enough software manufacturers and start-ups to become high-tech centers. The South Atlantic region was one such magnet.

Places like Atlanta; Raleigh and Durham, N.C.; Central and South Florida; and South Carolina were all impacted by either the high-tech boom or bust - or both. Likewise, their real estate markets were affected - flourishing, failing or surviving, depending on the place.

RIDING THE WAVE

With the potential to pump millions of dollars into local economies through wages and tax revenues, it's understandable why any city would want to attract high-tech companies.

In some instances, the tech industry's employees make from 40 to 100 percent more than the average wage in a state, said Maryann Fiala, executive director of the Florida council of the AeA, a technology trade group formerly called the American Electronics Association.

"The technology industry's contribution to the economy is enormous," she said. "We're a high-wage industry. It's certainly the best game in town in terms of what you can do with the largesse that the industry provides any economy."

For the most part, high-tech companies attracted newcomers to the climate- friendly South Atlantic in the mid to late 1990s. Despite the bust in the early 2000s, many of those who moved to the region for hightech jobs stayed put after losing those jobs - finding work at other high-tech companies or forming their own companies, Fiala said.

When the downturn came, it came fast. High-tech startups all over the region - Patagon.com and Mitel in Florida, iXL in Atlanta, and SpectraSite Communications in the Raleigh area - vanished almost as quickly as they appeared. Industry stalwarts like IBM, Hewlett-Packard and Siemens downsized their operations in the region, as did newcomers Realestate.com and WebMD.

Some areas were hit harder than others. From 2002 to 2004 Georgia lost almost 20,000 high-tech jobs, going from 180,500 workers to 162,300. North Carolina lost 22,100 high-tech jobs between 2001 and 2002, according to AeA information.

ON THE REBOUND

Today, the high-tech industry is rebounding. High-tech employment totaled 5.6 million in 2005, according to the AeA information. The South Atlantic region is still putting out the welcome mat for these companies.

Florida currently has the third largest concentration of technology companies in the country, AeA's Fiala said. She attributed the survival of the area's high-tech firms to being smaller companies with just a few handfuls of employees. Fiala said these smaller companies were able to be flexible and better shift with the changes.

South Carolina has been more active in the high-tech resurgence than in the latest high-tech boom and bust. The state legislature created a $50 million venture capital fund to provide equity and seed capital for tech-related firms and an innovation fund to provide small grants to technology incubators connected to the state's research universities.

North Carolina, meanwhile, is home to Red Hat, the largest open source software company in the world, and also has the largest presence of IBM workers in the world, according to information from the North Carolina Technology Association.

Forbes.com recently ranked the Raleigh-Cary, N.C., area as the number one best city for jobs because of its low unemployment rate, low cost of living, educated population, strong income and good weather. In 2006, Raleigh added about 35,000 jobs and ended the year with a 3. …

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