What’s behind Toronto's banner year of success and its hugely lucrative final quarter? We took a closer look at why this city has been "feeling the love."
Move over, Silicon Valley: Toronto is the new standard for tech growth.
According to a new report by CBRE Group, Toronto added a stunning 82,100 technology-related jobs from 2012 to 2017. That’s more than any other North American city, beating out the San Francisco Bay Area for the No. 1 spot by 4,270 jobs. That means Toronto increased its pool of tech workers by 51.5 percent in a mere five years.
Further, Toronto jumped up to the fourth-ranked overall tech talent market in North America in CBRE’s analysis – based on 13 different metrics including market depth, vitality and attractiveness – behind only the Bay Area, Seattle and Washington, D.C.
Clearly, Canada’s largest city is currently a red-hot destination for tech companies. But CBRE’s thorough report offers significant detail into how Toronto ascended to this position of prominence, and how opportunistic local talent might be able to capitalize on the city’s ongoing surge in tech jobs.
Here are a few things we learned.
1. Toronto is Relying on Outside Talent
As tech hiring in Toronto ramps up, it’s obvious that the city’s supply of highly trained tech talent is woefully inadequate.
CBRE’s “Brain Gain” analysis measured the number of tech degree graduates compared to the number of tech jobs created in each market, with the goal of figuring out which cities were attracting talent from elsewhere – and which markets were seeing educated employees leave in droves.
Toronto was by far the leader in “Brain Gain,” meaning more of our tech talent came from outside the city than any other market included in CBRE’s analysis. In total, there was a disparity of 55,025 between the number of jobs added and the number of tech degrees in the same period, more than San Francisco (46,529), Charlotte (14,749) or Seattle (10,118). At the other end of the spectrum, Washington, D.C., had a “Brain Drain” disparity of 48,231.
What does this mean? Clearly, there’s an opportunity for ambitious local tech talent in Toronto – but the current workforce might lack the right education and experience.
2. Toronto Will Attract More Companies
If you’re wondering about Toronto’s sustainability as the continent’s fastest-growing tech market, consider that it’s still one of the cheapest cities for tech firms to operate.
CBRE’s study found that a 500-employee firm renting a 75,000 square-foot space in Toronto would face estimated one-year operating costs of $30,224,259. Only Vancouver and Montreal were cheaper. The Bay Area, meanwhile, was the most expensive market for tech companies to operate, with a total estimated cost of $59,124,612.
It’s no wonder, then, that tech titans such as Google, Amazon, and Uber continue to expand their operations in the city.
3. It’s a Good Time to be a Developer
Of all the occupations in Toronto’s overheating tech market, developers have seen their wages balloon at the fastest rate.
Software developers and programmers saw average wages grow 20.2 percent to $84,656, while the total number of employed developers and programmers grew 47.9 percent to 62,100.
There’s still more room for growth in the development space. The study also found that developers and programmers comprised only 25.7 percent of Toronto’s total tech talent – compared to 51.8 percent in Seattle and 45.3 percent in the Bay Area.
4. Toronto’s Workforce is Comparatively Old
Surprisingly, Toronto’s tech market could face another crunch as a number of new additions to the tech workforce are already nearing retirement age.
Over the past five years, Toronto saw significant growth among older workers who might be close to aging out of the workforce. There was 21.4 percent growth amongst 70 to 79-year-olds, a 21.5 increase among 60 to 69 year olds, and an overall 54.3 percent increase among workers over the age of 50.
Simply put, that’s a staggering number compared to top tech talent markets such as the Bay Area (where 30.1 percent of growth was concentrated among 50-plus workers), New York (29.8 percent), and Washington (25 percent).
Millennials in their 20s accounted for just 14.5 percent of total growth in Toronto, compared to 33.2 percent in Seattle and 20.3 percent in the Bay Area.
If Toronto is going to meet the demand of its burgeoning tech industry, young people will need to enter the industry in far larger numbers.
5. Digital Skills Education is Increasingly Valuable
Although the CBRE report found that the quality of Toronto’s tech workers was extremely high, it seems from an education standpoint, there is still room for improvement.
Overall, CBRE’s report found that only 36 percent of Toronto tech workers had attained a bachelor’s degree or higher, compared to 49 percent in the Bay Area, 63 percent in Seattle, and 57 percent in Washington, D.C.
Furthermore, the report noted that candidates with robust educational backgrounds have never been more highly sought-after, which has led to a 42 percent increase in the completion rate of tech-related programs across all markets since 2012.
“Demand is high for tech-related classes and degrees,” the report read. In Toronto’s case, that may be putting it mildly.