STEM Tenants

STEM tenants

STEM tenants currently drive the demand for office and industrial space in many markets throughout the U.S. and Canada.  They’re taking available space in previously vacant buildings, bringing relief to some depressed real estate markets.

What Are STEM Tenants?

STEM is an abbreviation for science, technology, engineering, and mathematics.  In other words, cutting-edge industries such as high technology, biotechnology, and biosciences.

There are two reasons why STEM tenants have been bringing relief, and much needed rental revenues, to new building owners and investors in REITs.

Why Are They Good?

A recent article in the World Property Journal noted that when STEM tenants lease space, they lease lots of it.  Often times in the 50,000 foot plus range.

Secondly, they’re great not just for owners of buildings with a high vacancy rate, but for secondary and tertiary markets as well.

That’s because companies that employ workers skilled in science, technology, engineering and mathematics find that they have to go where the talent is, rather than successfully recruiting employees to relocate and come to them.

Going Where The Work Force Is Skilled

That’s one of the reasons by high-tech companies such as Google, Amazon, and venture-capital funded startup companies are appearing in cities where you might not expect them to be.

They’ve got to go where the labor pool is.  This works out well for the tech companies too, because often times the non-traditional technology areas also have much more affordable space to lease than would Silicon Valley or Silicon Beach in California.

Office, Industrial, and More

While STEM employers are users of Class A office space, they will also re-purpose older Class B or C space for new landlords, or renovate dated industrial property into a work environment that will attract the labor force that they need.

In certain markets there’s also an increase in shared work and office space, because when high-tech employers come to town, small support services and entrepreneurial businesses are also created.