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As Toronto’s tech scene takes centre stage, here’s what commercial real estate professionals need to know
After years of dramatic growth, Toronto’s tech scene is finally ready to take centre stage. The city has been crowned North America’s fastest growing market for tech talent, according to CBRE’s 2019 Scoring Tech Talent report.
While a thriving tech ecosystem is good news for many aspects of the Canadian economy, it’s particularly relevant to one industry you might not expect.
Tech job growth has been a major driver of office leasing activity for years, and it’s a trend that won’t be slowing down any time soon. Canadian commercial real estate professionals stand to benefit from the rise in activity, and CBRE has all the information you need to find out how.
As vacancy rates fall, rents rise
As the world’s biggest tech companies and the country’s most interesting start-ups snatch up the city’s most sought-after office space, vacancy rates are falling, and demand is heating up. These strong fundamentals mean there are plenty of profitable strategies
for savvy commercial real estate professionals to take advantage of, and they’ll need to move quickly.
Over a third of downtown Toronto office demand is coming from tech companies, which grew their job pool by a staggering 54.0% from 2013 to 2018. These same companies are often making decisions based on “tech clustering,” willing to pay more for specific neighbourhoods, streets or buildings with a concentration of other tech companies they can collaborate with, driving competition and rental rates up.
With the city’s downtown office vacancy rate sitting at just 2.6%, and the average asking rent-per-square-foot breaching $40.00, investors and landlords should prepare for a new age of office demand and growth. Meanwhile, tenants might increasingly consider non-traditional options and locations further afield
Canada’s next tech hubs
Those singularly focused on Toronto’s rise could miss out on major opportunities in smaller markets. As companies look for more affordable office space outside of the pricey core markets, cities like Hamilton and Waterloo are reaping the benefits.
Both cities saw tech jobs grow by 52.1% and 40.4%, respectively, over the past five years. Hamilton’s proximity to Toronto, coupled with a lower price point, makes it the ideal location for companies looking to scale quickly.
, with its two world-class universities, offers a pool of affordable young talent, along with plenty of space for a growing startup.
For investors looking for the next up-and-coming commercial real estate market, or tenants hoping to find the best bang for their buck, these two cities are growing more attractive by the day.