High quality talent and low costs are driving North America's fastest growing market

Ontario's competitive business costs, availability of highly skilled tech labour, and the support of North America's second largest IT cluster has helped position Toronto among the top locations for ambitious tech companies. The number of tech jobs in the city swelled to 212,500 by the end of 2016, the fifth most in North America, as Toronto ranked 6th overall in the 2017 CBRE Scoring Tech Talent report, up from 12th in 2016.

Increase in technology jobs, 2015-2016

Fastest growing tech markets in North America
City Tech Jobs
Toronto 22,500
San Francisco 11,540
New York City 5,370

"Toronto is becoming a leader in producing world-class tech talent, particularly in the artificial intelligence field, and there has been an incredible rate of growth in our tech labour force in the past year," says Werner Dietl, Executive Vice President and GTA Regional Managing Director of CBRE Canada. "When you consider we've added more tech jobs from 2015 to 2016 than New York and the San Francisco Bay Area combined, it shows just how vibrant Toronto's tech industry has become. Tech companies now comprise over 20% of all current office space demand in the city."

CBRE's Scoring Tech Talent is an analysis of labour market conditions of 50 of the top North American tech cities. The scorecard evaluates each market's depth, vitality and attractiveness to tech companies by measuring 13 metrics related to the cost and quality of their tech labour market, business costs and cost of living.

Toronto offers a low-cost alternative to U.S. tech capitals

The greatest cost for tech companies is employee wages. While average tech salaries in San Francisco are nearly $123,000 per year, wages in Toronto average just over $82,000 per year, which is comparable to Kansas City. And when CBRE analyzed tech talent quality vs. cost for software engineers, Toronto and Vancouver were the only talent centres rated "very high quality" while having average salaries of less than $75,000.

Competitive commercial real estate costs also set Toronto apart from its peers. At $25.51USD per square foot (Q1, 2017), the average asking price of Toronto office space ranked 21st out of 50 markets; less expensive than Newark, New Jersey and Minneapolis, Minnesota; and comparable to Nashville, Tennessee.

Finally, CBRE examined one-year wage and rent obligations for a sample U.S.-based tech firm of 500 employees operating from 75,000 square feet of office space. Toronto's estimated cost was lower than all 48 U.S. cities surveyed, and less than half the cost of both New York City and San Francisco.

"Even if you remove the effect of a discounted Canadian versus US dollar, Toronto still remains one of the most cost effective markets in North America for tech firms. Regardless of currency differences, Toronto remains comparatively cheap for both talent and real estate costs when compared to major markets such as New York, San Francisco and Boston. Not only are we a cheaper market to operate in, Toronto also provides international firms access to both the city's high-quality talent pool and Canada's immigration policies that allow them to recruit and bring over the best talent from around the world," adds Dietl.

Related: Global IT firms are relocating to Toronto – Here's why

CBRE reports the most common characteristics of North America's top tech markets

CBRE also looked at the most common characteristics of top tech centres, which include high concentrations of tech talent, growing rates of millenials and support of strong IT clusters.

Toronto ranks fifth in North America for tech talent labour concentration, with tech jobs accounting for 6.9% of Toronto's total labour market, more than Raleigh-Durham, Boston and Atlanta.

When it comes to Toronto's millennial population, the city that was rated the best place in the world for youth by Citi Foundation showed a 9.5% growth rate over a five year period. Only Seattle and Raleigh-Durham had higher increases in numbers of people in the millennial demographic, as Toronto tied with San Francisco for third.

The Toronto-Kitchener-Waterloo-Ottawa Technology Corridor is also a part of North America's second largest tech cluster (after San Francisco). Ontario's innovation ecosystem plays an important role in both drawing smaller organizations to the region and supporting them as they develop their innovations. It also benefits from having a North American financial centre that is second only to New York City.

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July 28, 2017
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