It’s not yet the top tech-hub in North America but we’ll go out on a limb and say Toronto has the opportunity to take that accolade in the not-so-distant future. The tech industry in Toronto has been brewing for some time as tech titans like Twitter, Shopify and Uber set up shop and the city now ranks second only to Silicon Valley. If growth continues at the same rate however, Toronto will overtake Silicon Valley as the city with the most tech jobs in North America within 2 years.
We’d be doing a huge disservice if we didn’t also mention the Waterloo region in the ‘up-and-coming’ stakes. A smaller tech-centre but with impressive credentials which sees it consistently being referred to as part of the Toronto-Waterloo tech corridor, the University of Waterloo produces some of the countries’ top tech-talent and accounts for 18% of all Canadian tech-founders.
What makes a tech-hub?
There’s no universal standard on what makes a tech-hub, more a set of favorable conditions that get it noticed. The specifics on these conditions may be somewhat subjective but the general characteristics of a tech-hub are broadly consistent across the various studies and rankings.
Potential for innovation
Toronto is possibly gaining the most status in this area. Innovation in a city includes looking at such measures as the quality of education, size of the tech talent pool, how many startups are present and what the amount of investment is into R&D from both a public and private perspective.
With world-class computer science, engineering and tech universities, 5,200 startups and 15,000 tech companies supported in the Toronto-Waterloo corridor, Toronto certainly ticks all these boxes. Progressive immigration policies and ambitious targets to welcome 1.2 million newcomers between now and 2023 demonstrate the commitment of the Canadian government to ensuring that businesses always have access to the elite of the world’s I.T and tech talent. The economy depends upon an influx of skilled workers to support the growth of business and aid the financial recovery from the pandemic. A third of immigrants also become business owners and employees themselves.
Public interest and investment into the tech-industry has also seen massive growth over recent years. Venture capital funding has risen into the billions across a relatively short period and R&D investment from major multinationals and tech innovators has increased by over 150% since 2013 to around $3 billion a year.
Propensity for doing business
The industry will assess a location as to how easy it is to do business there with regards to market size and competition, government policies, availability and ease of access to public funding programs. On this basis, the region is making great strides again, positioning itself as a leader in deep tech including AR/VR, cyber-security and artificial intelligence which can be applied across diverse industries.
The government has recognized the increasing importance of the tech-industry to Canada’s economy, providing a growing number of funding options, grants and tax incentives geared towards entrepreneurs and high growth startups with initiatives like the Strategic Innovation Fund.
Cost of occupation
An obvious one and fairly easy to determine - what’s the cost of establishing a base in that particular city and are suitable premises easy to source? Rental rates may be on the increase but still comparatively lower than many US cities and average salaries in Toronto also remain fairly low while the quality of skilled workers and graduates is growing.
Aside from these more tangible considerations, there are other reasons Toronto (and Canada as a whole actually) is really catching the eye of tech founders and owners moving out of Silicon valley, Asia and Europe. Canada is known for being one of the most welcoming countries’ in the world for newcomers with over half the population having migrated from elsewhere and it’s reputation precedes it as being one of the world’s politest and laid-back nations. America’s loss is Canada’s gain as restrictive immigration policy south of the border in the past couple of years has propelled Canada further up in the ‘nicer’ stakes.
This diversity and welcoming nature shouldn’t be understated as inclusiveness is a significant draw for companies considering where to create a base. Indeed, ‘Collision’, a global tech startup event, relocated from the US to Toronto in 2019.
CEO and founder of Collision, Paddy Cosgrove, discusses the reasons why they chose Toronto...
Why should investors take notice?
Well, we’ve all heard the phrase “money attracts money”. Tech-cities that attract a high concentration of wealth and investment can expect property prices to rise almost twice as fast as counterparts in other cities. Tech companies already account for more than a third of downtown Toronto office demand and that will only escalate. These businesses often seek to be in close proximity to other tech-based companies and startups with certain districts and streets becoming very competitive, pushing up rental rates in the process.
Smaller technology centers such as Waterloo-Kitchener shouldn’t be overlooked either as the pandemic has compelled employees to think about their work-life balance and prioritize health and quality of life above everything else. In this respect, tech hubs adjacent to Toronto can offer businesses and employees from both home and abroad, the balance that they’re seeking between work and access to the great Canadian outdoors.
While many tech businesses have adopted a remote work approach during the pandemic, their city-center offices will once again become hubs for fostering company culture and attracting the world’s best talent, for whom suburbia will never appeal. This is reinforced by the many tech-giants that have indicated plans to return to places of work and hybrid-work as soon as they are able to do so. According to Toronto Life, many of these organizations are in fact taking on new space in the midst of all the upheaval; Google for example, who are adding new office space to accommodate 5000 employees in their existing Toronto, Waterloo and Montreal locations, to be ready as early as 2022.
Reach out to discuss all your commercial real estate needs in Canada’s thriving tech industry.