Four of Canada’s largest cities and one regional player offer the top five homes for tech talent based on CBRE’s 2017 analysis of key market factors. Toronto, Ottawa, Vancouver, Montreal and Waterloo are deemed to provide the best dynamic for nurturing the workforce and fostering innovation in cost-competitive space. Calgary, Edmonton, Halifax, Winnipeg and London, Ontario round out the list of surveyed cities.
Tech firms notably accounted for 30 per cent of office leasing activity in the third quarter of 2017 and clearly have growing impact and clout as a tenant group. About 5 per cent of the Canadian workforce is currently employed in the sector — equating to approximately 776,000 jobs — and 130,000 of those positions have been created since 2011.
“Landlords are competing for tech tenants and are most successful when leasing existing character-filled, brick-and-beam buildings,” states the 2017 Scoring Tech Talent Report. “As supply dwindles, landlords are increasingly defixturing office towers to fashion desirable office space in amenity-filled neighbourhoods.”
CBRE analysts identify a city’s current concentration of tech labour as a leading indicator of its growth potential because existing successful tech hubs are seen as a magnet for similar businesses. Pools of skilled labour then draw other businesses that further spur innovation, collaboration and new enterprise.
Toronto ranks first in this category, which measures the city’s share of the national tech workforce and tech’s prominence in relation to other types of employment. More than one quarter of Canada’s total tech workforce is now located in Toronto, where it represents more than 7 per cent of the city’s employment base. Montreal is home to next greatest allocation of the national tech workforce, at 16 per cent. Ottawa employs about eight per cent of Canadian tech workers, who make up nearly 11 per cent of the city’s labour force.
Waterloo is home to about seven per cent of the country’s tech talent, but the region’s momentum is unparalleled. The 7,400 tech jobs the region gained between 2014-16 equate to nearly 54 per cent growth in the city’s tech sector. Toronto gained 29,400 jobs in the same period, which was a 16 per cent jump in tech employment.
The report links Waterloo’s trajectory to its status as “a tech innovation and start-up hub for the country”, which is also reflected in the salaries Waterloo-based tech workers command — more than double the region’s average non-tech earnings. Elsewhere, Toronto, Vancouver and Montreal are leveraging their size and other strengths of a more diverse economy.
“As all sectors of the economy expand their technological capabilities, markets that have experienced the most tech employment growth have the most momentum and likelihood of expanding their pool of tech talent,” the report hypothesizes. “While being amongst the highest cost tech labour markets, Waterloo Region also offers the highest concentration of quality tech talent. Toronto and Vancouver offer a good balance between quality and cost.”
All 10 surveyed cities surpass the national average for residents’ attained level of education, with a chart-topping 45 per cent of Ottawans aged 25 to 64 holding at least a Bachelor’s degree. In addition, Canada’s educational infrastructure has been an impetus for tech clusters.
“Top tech markets distinguish themselves with the presence of tech clusters, which typically form around pre-eminent universities allowing for improved access to a constant flow of new talent,” the report observes. “Many universities in Canada have created partnerships with incubation labs to help foster the development of tech communities, creating a strong link between the industry and the labour force.”
CBRE analysts suggest tech companies view real estate more as a cost of business than as a major influence on choosing locations. However, office rents and housing affordability no doubt combine with other factors in the decision making process.
“Vancouver has the highest average gross rents, followed by Toronto and Edmonton. Despite being the second largest city by population, Montreal has the fifth highest office rent, which provides the city with a competitive advantage equal to midsized cities like Ottawa,” the report notes.
Although tech talent typically enjoys higher-than-average salaries, those earnings stretch farther in some of the surveyed markets. In Montreal, the average tech worker would spend just less than 12 per cent of income on apartment rent, while tech talent in Vancouver would spend 18.5 per cent of earnings.