Heated competition for tech talent in the financial services sector — which comprises 40% of Toronto's downtown office market — is forcing firms to reassess their approach to workplace design.
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CBRE Canada’s research head, Ray Wong, told us there’s pressure on financial services companies to cut costs and make their operations more efficient to deliver services to customers at lower rates. “A lot of that’s being done through technology.” Real estate has become an important way for firms to showcase their culture. And to lure and retain a new generation of fintech talent that specializes in areas like software development, digital media and data science, workplaces must be flexible and collaborative — "it’s unlikely they’ll settle for working in a cube farm" — and offer amenities such as fitness facilities and on-site food and retail.
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Financial services firms accounted for 42% of all pre-lease commitments in Toronto’s new office towers in the 2014-2017 development cycle. The firms are being pushed to be more innovative and digital-focused, said Wendy Waters, senior director of research services and strategy for GWL Realty Advisors, whose firm co-authored a report with CBRE on downtown Toronto's rapidly evolving office market. “It’s one reason new developments (such as Southcore Financial Centre, above) are attractive to them,” she said. “The latest technology can be implemented into these buildings at the construction stage.”
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Toronto is expected to grow by 10,000 financial services jobs by 2020, according to the CBRE/GWLRA report. This will only solidify the sector’s dominance within the office market and bolster demand for space downtown, where vacancy is currently 4.4%, among the lowest in North America. This reaffirms GWLRA's long-term investment confidence in downtown office, Waters told us. Toronto houses 60 of Canada’s 100 known fintech firms, which occupy 260k SF of office space, according to the report. Fintech may not be a major driver of office space at the moment, Wong said, “but there are signs it’s poised for substantial growth."
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