Condo Investment Insights

For a second year running, Toronto is North America’s fastest growing tech market, according to CBRE’s annual Scoring Tech Talent Report. Toronto jumped up two spots from sixth to fourth on the report’s Tech Talent Scorecard, marking the first time a Canadian market has made the top five. Toronto’s success is in large part due to the city’s tech talent employment base growing by the largest number of workers in 2017, as it added 28,900 tech jobs, a 13.6% increase from the previous year. Other Canadian cities had a strong showing with Ottawa and Montreal ranking at 13th and 14th, respectively.

“High-quality and well-educated tech talent, cost-efficiencies and welcoming immigration policies are competitive advantages for the Canadian tech markets. Toronto continues to outpace other North American markets, having added more tech jobs in 2017 than the San Francisco Bay Area, Seattle and Washington, D.C. combined,” commented Paul Morassutti, Executive Managing Director at CBRE Canada. “Canada’s tech markets are booming. In downtown Toronto alone, tech demand sits at 36% of all current office space demand.”

The top five markets for tech talent in 2018 were the San Francisco Bay Area, Seattle, Washington, D.C., Toronto and New York. The Tech Talent Scorecard is determined based on 13 unique metrics, including tech talent supply, growth, concentration, cost, completed tech degrees, industry outlook for tech job growth, and market outlook for both office and apartment rent cost growth.

The report, which ranks 50 U.S. and Canadian markets according to their ability to attract and grow tech talent, also found that Ottawa is the top momentum market with a strong tech employment growth trajectory in recent years. Tech labour concentration – as a percentage of total employment – is an influential factor in how “tech-centric” the market is and is a determinant of growth potential. Ottawa comprises the largest concentration of tech talent on the list at 11.2%, more than three times the U.S. national average of 3.5%. Toronto is the third most concentrated tech market at 8.9%.

“Ottawa is shedding its government town image. It is home to over 1,700 technology companies and employs over 70,000 tech talent employees,” said Shawn Hamilton, Managing Director of CBRE Ottawa. “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. Shopify continues to be our homegrown success story and has the international appeal to encourage tech clustering.”

CRBE’s interactive Tech Talent Analyzer found that companies in pursuit of highly skilled tech talent – spanning every industry today – might be in for more sticker shock. Combined talent and occupancy costs have increased in every market, with the lowest cost option growing as much as 12.5%.

Canadian markets were among the best-value markets, due in part to the strong U.S. dollar, with Toronto, Vancouver, Montreal and Ottawa offering high quality talent at relatively low cost. Taking both talent and real estate costs into consideration, the “typical” 500-person tech company needing 75,000 sq. ft. of office space can expect a total annual cost to range from USD$27.6 million in Montreal, the least expensive market overall, to USD$32.2 million in Ottawa, the most expensive Canadian market. In contrast, the cheapest U.S. market is Rochester, NY which requires USD$36.3 million to run a similar operation.

Traditional tech firms are no longer battling among themselves to attract and retain the best talent. They now have to pull out all the stops – from competitive salaries to office perks – to compete with all the other industries that are looking to attract the best and brightest tech talent.

“Companies looking to house operations are putting serious thought to locating in Canada. Compared to cities such as New York, Washington, D.C., Newark and Los Angeles, Toronto is among the best value for quality options for tech firms thanks to less expensive access to labour and real estate, but also high educational attainment levels. In short, Canada provides access to very high quality labour at a fraction of the cost,” said Morassutti.

Original link:http://www.cbre.ca/EN/mediacentre/Pages/Toronto-Rises-to-4-in-CBRE%E2%80%99s-Annual-Tech-Talent-Scorecard.aspx