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According to the Tech-ThirtyReport by CBRE Group, Toronto's high tech job market grew by 25.9% during the period of 2013 to 2015, adding 24,900 new jobs. That's second only to Silicon Valley and more than San Francisco (3rd), New York City (4th), and Seattle (5th). Having increased from 5.9% during the previous period of 2011 to 2013, it's enough to earn Toronto the title of this year's Momentum Tech City.
Invest in Ontario spoke with representatives from two of the world's largest commercial real estate agencies, CBRE Group and Colliers International, to learn more about what is luring global IT firms to Toronto.
"There is huge significance for Toronto being ranked as the number one momentum tech city," says Raymond Wong, Head of Research at CBRE Canada. "Toronto's tech workforce has grown by over a third in the last five years; that's nearly 50,000 high tech jobs."
Wong cites two major reasons global IT firms are increasingly choosing to relocate to Toronto:
"First, the city is by far and away the largest tech market in Canada, with over 25% of all Canadian tech talent located here in Toronto. This means there is already an established tech community and infrastructure that firms can quickly plug into to access both talent and capital," says Wong. "And Toronto is also Canada's corporate headquarters and the centre of finance, R&D, life sciences and venture capital, all alongside a quickly growing start-up ecosystem."
Related: Toronto rated a top 3 global tech hub
"Second, based on our projections of the annual operating cost of a tech firm of 500 employees, which includes office rent and salaries, Toronto ranks as only the fourth most expensive in Canada," continues Wong. "In fact, if you look at the top 50 North American Tech markets and rank them in order of expense, Toronto is 49th."
"Primarily through our west coast and New York City offices, Colliers has recently worked with Autodesk, Zynga, Slack, Okta, and Thomson Reuters, among others," says Graeme Young, Senior Vice President of Colliers International.
"We've worked with a number of global IT firms looking to expand their presence in Toronto, including eBay, PayPal and Uber," states CBRE's Vice President, Werner Dietl.
"Downtown West is a centre for tech firms looking to relocate to Toronto," says Young. "Their focus is typically Spadina and King, west to Liberty Village. This area has a different vibe and street activity compared to the central business district. The sidewalks bustle with millennials who work in the technology, media, and advertising industries. They are targets for tech firms to hire."
Related: Global survey finds Canada best place in the world for millennials
"On the other hand, Coca Cola relocated their Canadian headquarters to downtown east a couple years ago, partly because they felt this district captured the liveliness that reflects their brand." Young also points to Thomson Reuters, who recently opened a downtown innovation hub that may eventually hire as many as 1,500 people. "They chose to be within close proximity to Union Station in order to give them the flexibility to hire from Toronto's suburbs in addition to the downtown tech community," he explains.
And high demand for downtown west property is also a reason tech firms have been spreading out across the city. "With competition for space increasing, we have seen a few tech firms moving into the financial core and occupying more traditional office towers," says Dietl. "To provide the creative aesthetic they want, tech tenants are taking these traditional office interiors and 'defixturing' them. By exposing the ceilings and finished concrete floors they get that edgy industrial finish. "Fortunately, the owners and developers in downtown west are working on some very exciting new developments and this will add some supply once completed," Dietl reassures us.
"IT firms have some specific requirements when they are looking for a new office location," says Dietl. "In terms of location, tech firms place greater value on access to amenities and transit than some other industries. They recruit primarily from the millennial base that want access to a Live, Work, Play environment, which means they want to be able to walk, bike or take the streetcar to work. Then, after work, they want to be able to walk around the corner to grab a drink or a bite to eat with friends and colleagues at a cool bar or restaurant. Tech firms want to be close to where this talent lives, and with millennials leaving the suburbs in droves to live downtown, this is where tech firms have to be. Asking your workers to drive 45 minutes out to a suburban office will not cut it amongst the talent base you want to recruit from," he warns his high tech clients.
"And of course, on the technology side, high speed broadband is a must-have for global technology firms. Fortunately, according to Young, IT infrastructure has never been a limiting factor for any of the global tech companies locating to Toronto,"he adds. "Meanwhile, for post-production and game development, where companies need ultra-high speed internet, firms might gravitate to Toronto's Harbourfront district, where recently installed ultra-high capacity broadband is able to serve their needs."
"These clients have identified Toronto as an innovation hub that also has a strong and diverse talent pool, educated by local universities that offer the best computer engineering programs in Canada. It has lower office rental costs and lower salaries than Silicon Valley and of course there is the advantage of the Canadian dollar." But Toronto isn't the only city on the map, explains Young.
"Innovation and tech companies are also interested in Kitchener-Waterloo, and that is entirely a talent decision as well. The University of Waterloo has moved from start-up-driven activity to a robust innovation ecosystem that is attracting newcomers like Shopify and Google, who are expanding rapidly."
Related: CIX unveils its list of the top Canadian tech companies
CBRE Group's Sr. Vice President also sings praise for the Toronto-Waterloo corridor, stating, "The corridor has Canada's largest cluster of research universities and technical colleges including institutes devoted to quantum computing, theoretical physics and artificial intelligence. It's home to 15,000 tech companies, 5,200 start-ups and over 200,000 tech workers. There is huge opportunity for growth," he says. But the corridor isn't the only big draw for global technology firms, Dietl explains. Ottawa is also an important tech market. "It's third in our ranking of the top 10 Canadian tech talent markets and, at 11%, it has the highest concentration of tech workers compared to total jobs. There is already a solid base of tech talent within the city, and 43% of its working population is university educated, the highest percentage in Canada. Ottawa has already created several successful tech unicorns that have gone on to global success."
Related: Shopify is a global tech leader that is fiercely Canadian
The Ontario Investment Office provides a one-window approach for businesses to access the information and resources necessary to make a successful relocation decision. Register with Invest in Ontario to receive investment information, or contact us to learn more.
November 18, 2016
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All figures are in Canadian dollars unless otherwise noted. Information is accurate at the time of publication.