Toronto Has Become North America's Fastest-Growing Tech Market
Toronto is North America’s fastest-growing tech market and its second-cheapest, according to a new CBRE report.
Overall, the fifth annual CBRE Scoring Tech Talent Report, which ranks 50 U.S. and Canadian markets on attracting and growing tech talent, found Toronto had leaped six positions from No. 12 to sixth, behind leaders San Francisco, Seattle, New York, Washington and Atlanta.
The report concludes Toronto’s growing talent employment base, which set the pace with a leading 22,500 new tech jobs in 2015-16, was a key factor in its rise.
“We’re growing our talent domestically,” said Werner Dietl, CBRE Canada executive vice president and GTA regional managing director. “Places like University of Toronto are becoming leaders in producing tech talent, particularly in AI (artificial intelligence).”
Toronto ranks as North America’s fourth-largest tech talent market, with over 212,000 tech workers, representing an increase of 32% over the past five years. Toronto tech talent comprised 8% of all workers in 2016, up from 6.9% in 2015. The city also ranked third among large markets in population growth for tech-friendly millennials, increasing its pool 9.5% between 2010 and 2015.
“[Toronto’s tech growth] is all about momentum, particularly downtown,” Dietl said. “Access to talent. Access to transportation. They are all factors. And clustering — being around like-minded companies. We also have a government that is supporting the industry and really starting to understand the sector.”
The CBRE report went on to place Toronto second only to Vancouver when it came to best-value markets for tech firms to operate when it comes to cost and quality of talent. It concluded that the estimated cost of running a 500-person tech firm in Toronto, taking into consideration both talent and real estate costs, totaled US$25.9M annually. By comparison, the cheapest U.S. market was Oklahoma City at US$33.9M.
It is easy to credit that to the weaker Canadian dollar, but Dietl said it is more complicated than that.
"[The Canadian dollar] is a factor, no doubt. But, also, you have a number of companies utilizing our favourable immigration laws. Add to that the momentum we have, the talent we have, the government cooperation, it isn’t all about the dollar.”
But can Toronto handle the rapid growth of tech?
Dietl said tech companies now comprise over 20% of all current office space demand in the city. Office vacancy rates downtown in the last quarter hit a record low of 3.8%, down from 4.6% in Q1.
“We’re OK on supply side, but the vacancy rate is low,” he said. “In the short term, we have the inventory to handle the demand.”
The report found overall North American figures for the tech industry were largely positive, with the number of tech workers having increased 27% in the past five years.
There are 4.9 million tech workers in the U.S. and 776,000 in Canada, accounting for 3.5% and 5.1% of total workers in each country.