Report: Twin Cities is an emerging tech hot spot, but still lags

The Twin Cities aren't viewed as a high-tech hub on a national scale, but a new report characterizes the area as an emerging market in the highly coveted field.

Still, midsize cities such as Indianapolis, Baltimore and Denver are seen as more competitive in the way they attract and encourage high-tech businesses and venture capital funding, according to the High-Technology Office Outlook released this month by Jones Lang LaSalle, a Chicago-based professional services and investment management firm.

"These are the high-quality jobs that you want," said Chris Rohrer, managing director in Jones Lang LaSalle's Minneapolis office.

The report tracks high-tech job growth and services concentration, share of national venture capital funding, intellectual capital (the availability of educated, skilled workers) and innovation.

By those measures, the Twin Cities broke into the top 10 in patent activity, the number of high-tech jobs in the market and the high education level of employees. "All of these factors help support innovation," Rohrer said.

While only 8.8 percent of the nation's "office-using" employers are high-tech companies, the impact this sector has had on the commercial office market in the past three years has been enormous, the report states.

Other types of employers have experienced flat or minimal growth, but high-tech firms have hired so many employees that they now face a highly competitive recruiting environment.

Where, geographically, does this pool talent work?

The report says downtown Minneapolis and the southwestern and western suburbs are the most active submarkets in high-tech office leasing.

Recent examples: Help/Systems' lease of 60,000 square feet of additional space in Eden Prairie, a move that doubled its footprint, and Oracle expanding its space in downtown Minneapolis by signing a seven-year deal for 137,000 square feet.

The report also mentions the software firm Calabrio Inc. signing a 30,000-square-foot lease in Minneapolis' North Loop neighborhood — an area where high-tech companies "are increasingly gravitating to."

Many buildings in this district offer loft-style space and are in proximity to a fast-growing creative class of young professionals.

Beyond the traditional office model, the report singles out CoCo — short for Coworking & Collaborative Space — which offers work space for individuals and groups in the Minneapolis Grain Exchange building, Lowertown St. Paul, and (soon) Uptown.

"Since 2010, the concept of co-working has gained significant momentum in the Twin Cities," the report states.

But CoCo co-founders Kyle Coolbroth and Don Ball question some of the benchmarks used in the Jones Lang LaSalle report.

The metro area's fortunes don't necessarily hinge on a handful of large companies, they said in an e-mail statement.

"When was the last time we succeeded in attracting a large corporate headquarters to Minnesota?" they ask, noting that nearly all of the state's Fortune 500 companies are homegrown.

The CoCo founders also say venture capital shouldn't be used as an indicator of economic well-being.

Instead, a "creator index" should be employed, where "creators represent a whole new crop of businesses — many of which will never select a single location as their office."

New workplaces must embrace a more fluid model "that does not always translate into traditional lease or funding models," they said.

"Talent is gathering in centers that have culture, food, a social scene and other talent they can access. This reality affects companies both large and small."

Janet Moore • 612-673-7752