If you locate your business in an area with a thriving tech community, you may have to pay employees more to keep up with skyrocketing housing costs.
The technology sector is causing a spike in rents, according to a study released by real estate website Trulia on Thursday. In January, rents rose an average of 5.7 percent in the 10 biggest tech hubs in the U.S. over the previous month, compared with an increase of 3.3 percent for the country's 100 biggest metropolitan areas.
It's the sign of an affordable-housing crisis, or what Matt Franklin, president of Foster City, California, affordable-housing developer MidPen Housing, called "the shadow of our success" in the Silicon Valley Business Journal.
For years, Silicon Valley CEOs have pointed to the availablility of affordable housing for employees as their biggest challenge, according to a trade group survey on the local business climate cited in the Journal. But few have made progress toward solving the problem, which has caused a rift between wealthy members of the tech industry and the rest of the community.
"Resentment simmers, at the fleets of Google buses that ferry workers to the company’s headquarters in Mountain View and back; the code jockeys who crowd elite coffeehouses, heads buried in their laptops; and the sleek black Uber cars that whisk hipsters from bar to bar," wrote Erica Goode and Claire Cain Miller in The New York Times.
In San Francisco, the priciest area on the list, rents rose 12.3 percent for the month, with an average two-bedroom apartment renting for $3,350, compared with $1,504 in other large metro areas. In Seattle, rents rose 9.2 percent to an average of $1,650 for a two-bedroom home.
So although you want to hire the best talent, if you locate your business in a tech hub, you may find yourself fielding pitches from candidates who come with a very high price tag. To stay in the black, it may be advisable to move to the outskirts of the area or even to avoid it altogether.