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Despite Silicon Beach, Los Angeles is merely America's 18th top tech city, report finds

Despite Silicon Beach, Los Angeles is merely America's 18th top tech city, report finds
A photo from 2013 shows Snapchat offices on Ocean Front Walk in Venice. (Genaro Molina / Los Angeles Times)

Los Angeles is home to hot tech firms such as Snap Inc. and Tinder, but Silicon Beach still has a long way to go to rival the tech industries of Silicon Valley or San Francisco.

That's according to a new study by real estate firm Cushman & Wakefield that ranks Los Angeles 18th among the nation's top 25 tech cities.

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Silicon Valley and San Francisco, unsurprisingly, ranked first and second, respectively. But the nation's two most populous cities did not fare as well.

"The rankings of New York (No. 15) and Los Angeles, I think, will shock a lot of people, but there is a lot going on in these places," said Robert Sammons, co-author of the report and regional director of northwest U.S. research at Cushman & Wakefield. "Really, the key reason why L.A. ranked where it did is the sheer size of the market. L.A. is sprawling with different sectors across L.A. County and there is more of a focus on media and entertainment, so tech sometimes gets caught in the mix."

The "Tech Cities 1.0" report determined placement by analyzing the concentration of talent, capital, local universities, entrepreneurial spirit and growth opportunity — the key ingredients that make up what the report's authors call a "tech stew."

Sammons said the study started by looking at the 100 largest metropolitan areas in the United States and whittled the list down based on certain metrics.

Los Angeles ranked last in percentage of the workforce in "knowledge occupations," such as positions in the computer, mathematical, architectural, engineering, scientific, healthcare, management and educational industries. Los Angeles had less than 20% in knowledge occupations, according to the report. Top-ranked Silicon Valley has more than 35% of its workforce in such jobs.

The city also has a lower percentage of workers with a bachelor's degree or higher. At just above 30%, Los Angeles is only slightly above the national average.

But the two go hand-in-hand, Sammons said.

"At a minimum, most people going into knowledge occupations hold a bachelor's degree," Sammons said. "Most are well-educated. There are, of course, random people that are college dropouts [in the tech industry], but those are the exceptions to the rule."

Those exceptions, of course, include tech industry icons such as Bill Gates, Mark Zuckerberg and Steve Jobs.

Sammons said the lack of knowledge occupations and the lack of higher education degrees were what put Los Angeles toward the bottom of the top 25. However, the city ranked fifth in venture capital funding, which Sammons said helped land it in the top 25.

"Los Angeles, which was historically known as the 'Entertainment Capital of the World,' more recently has started to become recognized as a hub for new media and technology companies," said Marques Williams, transaction advisor specializing in tenant brokerage with Cushman & Wakefield's media and technology practice group. "Companies are planting their flags in these industry-specific micro-communities, whether it's content/production in Hollywood (Netflix, Viacom), tech/advertising in the Westside (Snapchat, Riot Games), or startups in downtown L.A. (Hyperloop One, GoFundMe)."

Even with a lower ranking, Los Angeles' tech community is still only at the tip of the iceberg, said Arteen Arabshahi, vice president of Fika Ventures.

"The intersection of mature industries that already exist here, like media, aerospace, manufacturing, logistics and more, combined with the presence of a diverse set of entrepreneurs, sophisticated early stage capital and talent that is both rolling out of tech pillars locally and migrating to L.A., sets us up for a unique renaissance moment where people of all trades can form new, meaningful businesses here in L.A.," Arabshahi said.

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Twitter: @andangelo15

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