Toronto the fastest-growing tech market in North America
Toronto’s tech scene is so hot the city created more jobs than the San Francisco Bay area, Seattle and Washington, D.C., combined last year, while leapfrogging New York in a ranking of “talent markets.”
Toronto was the fastest-growing tech-jobs market in 2017, according to CBRE Group Inc.’s latest annual survey, released Tuesday. The city saw 28,900 tech jobs created, 14 per cent more than in 2016, for a total of more than 241,000 workers, up 52 per cent over the past five years, CBRE said. Downtown, tech accounted for more than a third of demand for office space.
Canada’s biggest city took fourth place in “tech talent,” a broad measure of competitiveness, pushing New York down a notch and coming in just after the Bay Area, Seattle and the U.S. capital. CBRE ranked 50 markets across North America, using measures such as talent supply, concentration, education and cost as well as outlooks for job and rent growth for both offices and apartments.
The real estate services firm cited some 5 million technology workers in the U.S. and more than 830,000 in Canada, across all sectors.
For employers, combined labour and occupancy costs increased in every market, by 13 per cent even in the least expensive one, Montreal.
“Companies looking to house operations are putting serious thought to locating in Canada,” Paul Morassutti, executive managing director at CBRE Canada, said in a statement accompanying the report. Toronto is among the best values for tech firms, he said, citing cheaper labor and real estate and a well-educated workforce. The U.S. Midwest offers good value as well, the report noted.
A 500-worker company requiring 75,000 square feet (7,000 square meters) of office space can expect total annual costs, in U.S. dollars, to range from US$27.6 million in Montreal to US$32.2 million in Ottawa, with Toronto in the middle at US$30.2 million. The costs in Rochester, New York, the cheapest U.S. market of those CBRE studied, amount to US$36.3 million, while the Bay Area adds up to US$57.4 million.
“The forces that are driving innovation and technology are really in the early stages here,” Morassutti said by phone. “When it comes to overall costs, even if you assume upward pressure on office rents, housing and salaries, our major markets still constitute a significant bargain to the U.S.”
To measure a market’s growth potential, CBRE looked at the concentration of technology labor as a percentage of total employment. Here the winner was Ottawa, Canada’s capital, at 11.2 per cent, more than three times the U.S. national average of 3.5 per cent. Toronto came in third, at 8.9 per cent.
“Ottawa is shedding its government-town image. It is home to over 1,700 technology companies and employs over 70,000 tech-talent employees,” Shawn Hamilton, managing director of CBRE Ottawa, said in the statement. “In the last five years, urban tech has grown to be the second-largest user group in downtown Ottawa, bigger than the accounting and legal sectors combined.”
U.S. markets rising in the study’s ranks include Cleveland and Columbus, in Ohio, and San Diego.