Property developers in Toronto are reportedly experiencing a surge in demand for office space, as the Canadian city becomes a new magnet for technology workers.
The demand for commercial property in the tech sector has doubled over the past five years, with the office vacancy rate dropping to a record low of 3.8% in 2Q17, according to a study by international commercial real estate firm CBRE.
Toronto is now North America’s fourth largest tech talent market, with over 212,000 workers. The city added 22,500 tech jobs between 2015 and 2016, more than New York and San Francisco combined.
As the technology market booms, consulting firms, venture capital investors, and private equity firms are setting up shop in the city.
Analysts say the combination of tech worker availability and low-cost real estate has played a key part in attracting technology firms from around the world. The lease price on residential buildings has also increased 17% over the past year, according to the Toronto Real Estate Board (TREB).
“Strong demand for talent that offer specific skills, such as software development, coupled with a tight labor supply, is driving companies to locate in markets with the largest concentrations of high quality talent,” the report noted.
Tech workers in Toronto do not get high salaries compared to their counterparts in the United States. According to CBRE, a tech employee in Toronto earns an average US$47,201 annually, the second lowest rate in North America’s established tech hubs.
“We have affordability and a tremendously high quality of labor, and we also have tremendous government and immigration policies in place that are creating a little bit of a snowball effect,” said Werner Dietl, CBRE Canada’s executive vice-president and Greater Toronto Area (GTA) regional managing director.