Canadian Cities Need Bigger, Better Tech Clusters to Compete Globally

In the wake of Amazon’s HQ2 decision, CBRE’s 2018 Canadian Tech Talent Report finds that tech clusters are lacking in the 20 markets analyzed

Toronto, ON – November 22, 2018 – Toronto continues to rank as Canada’s top tech talent market despite cities such as Victoria and St. John’s staking their claim to tech greatness. According to CBRE’s 2018 Scoring Canadian Tech Talent Report , although the Canadian tech sector is thriving, tech talent markets can do more to grow the industry and attract investment from global tech giants. Most notably, Canadian cities are lagging in the development and promotion of tech clusters.
 
“Toronto’s inclusion on Amazon’s HQ2 shortlist thrust Canada’s tech market into the spotlight. While our market is growing and is dynamic, our analysis suggests that tax incentives aren’t the only thing holding our cities back when competing for global tech investment,” commented Paul Morassutti, Vice Chairman at CBRE Canada. “Tech clusters don’t sprout overnight, but are essential to attracting large investments from global tech leaders. Concerted effort, policy and infrastructure from all levels of government, business leaders, venture capitalists, and research and academic centres is required to attract and retain high-tech firms and support connectivity between them.”
 
“It’s encouraging to note that the Canadian federal government has already identified the gap in business clusters and is implementing the Innovation Superclusters Initiative, a CAD $950 million program to encourage the establishment of business-led innovation superclusters. Now, the onus falls on the remainder of the business community to advocate for our highly educated tech talent markets.”
 
Tech Talent Scorecard
 
The top five Canadian tech talent markets in 2018 are Toronto, Ottawa, Montreal, Vancouver and Waterloo-Region, with Montreal replacing Vancouver in the top three. This is due to Montreal’s overall tech talent and high-tech concentration outpacing that of Vancouver’s for a second consecutive year.
 
The 2018 scorecard was expanded to include 20 Canadian cities to accommodate the growth of the tech industry and the heightened interest in it. The final rankings were determined based on 13 metrics, categorized into three thematic indicators relating to tech talent decision-making factors: tech talent employment, educational attainment and the high-tech industry outlook. Cost competitiveness measures were also evaluated.
 
Each market was ascribed a score out of 100 which reflects its attractiveness to tech employers and potential employees.

2018 RANK
MARKET
SCORE
 
2018 RANK
MARKET
SCORE
1
Toronto, ON
87.3
 
11
Edmonton, AB
38.0
2
Ottawa, ON
77.0
 
12
Winnipeg, MB
37.4
3
Montreal, QC
69.3
 
13
London, ON
36.3
4
Vancouver, BC
67.3
 
14
Oshawa, ON
33.7
5
Waterloo-Region, ON
66.6
 
15
Regina, SK
31.3
6
Calgary, AB
56.9
 
16
Barrie, ON
26.3
7
Halifax, NS
51.8
 
17
St. John’s, NL
23.3
8
Quebec City, QC
47.6
 
18
Windsor, ON
19.9
9
Hamilton, ON
47.5
 
19
Moncton, NB
17.9
10
Victoria, BC
46.4
 
20
Saskatoon, SK
15.1
 
New entrants to the scorecard performed well, with Quebec City, Hamilton and Victoria surprisingly rounding out the top 10. Quebec City has a strong concentration of tech talent that’s above the national average, while Victoria and Hamilton feature high quality, well-educated labour forces at a moderate cost to employers.
 
Overall, Canada added 178,800 tech jobs between 2012 and 2017, an increase of 27.3%, 57,600 of which were added in 2017 alone. Oshawa, ON, a new addition to the report, was the fastest growing tech talent market over the five-year period, adding 3,000 tech jobs, a 71.4% growth. However, Toronto led in terms of absolute growth and remains Canada’s tech capital, adding 82,100 tech jobs, up 51.5%.
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 leads Canada in tech concentration with 11.2% – also the highest in North America – followed by Toronto (8.9%) and Waterloo-Region (8.2%).
“While major tech markets have privileged access to capital, resources and labour, smaller neighbouring markets are beginning to see a spillover effect due to their proximity. For example, Toronto and Waterloo-Region have comparable tech concentrations, as do Montreal and Quebec City. These neighbouring cities have policies in place that encourage interconnectivity through economic partnerships and they are putting transit infrastructure in place to expand their tech networks and the reach of venture capitalist funding,” said Morassutti.
Cost Competitiveness

Top tech talent comes at a cost and Canadian markets offer high quality labour at a fraction compared to the U.S. Taking both talent and real estate costs into consideration, a typical 500-person tech company in 75,000 sq. ft. of office space in a large Canadian tech talent market (>50,000 tech workers) can expect total annual costs to range from CAD $41.6 million in Ottawa to CAD $35.7 million in Montreal. For contrast, Kansas City is the cheapest large U.S. market at CAD $50.1 million.
 
“No matter the size of the market, there are advantages to operating in Canada. Large markets tend to have a deeper pool of talent, while smaller markets attract talent with more competitive business and living costs,” commented Morassutti. “Tech, which now accounts for 23% of all office space demand in Canada, has driven rents up and vacancy down. Costs may be rising, but we are relatively affordable compared to other global cities and paying to be close to quality talent is a small trade-off for well-resourced tech companies.”
For further details and insights, download CBRE’s 2018 Scoring Canadian Tech Talent Report.


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