The CBRE 2020 Scoring Tech Talent report. (Courtesy CBRE)

Toronto and Montreal lost ground and Vancouver held its position, but the real Canadian winners in CBRE’s 2020 Scoring Tech Talent Report were Ottawa, Waterloo Region and Calgary.

Toronto slipped a spot in the North American rankings of cities which dominate the tech employment sector, falling behind Washington, D.C., to fourth overall.

Washington vaulted up from the No. 4 spot into second place on the strength of its 10 per cent job growth in the sector during the past five years – the district now has more than a quarter million tech jobs.

Cities are scored based on 13 criteria ranging from total tech sector jobs to growth, costs to do business, the number of students graduating with tech degrees, etc. The top five for 2020 are: San Francisco Bay Area, Washington, Seattle, Toronto and New York City.

Vancouver held its No. 12 ranking, while Montreal slipped three spots to No. 16.

Canadian success stories

“Online demand and the tech sector in general have gone into overdrive since the emergence of COVID-19. This report points to the cities likely to benefit most from this activity and Toronto continues to be near the front of a very competitive pack,” said CBRE Canada vice-chairman Paul Morassutti in comments accompanying the release of the report.

“With Canada making headway in the effort to contain COVID-19, and U.S. visa changes likely to hurt tech talent attraction south of the border, the tech-mentum of Canadian cities is likely sustainable.”

Canada’s tech sector employs about 900,000, or 5.6 per cent of the total workforce.

In Ottawa, despite minimal job growth in the sector during recent years – the city added only 1,100 tech positions since 2014 according to the study – the national capital rose five positions to No. 14.

The city, which just topped million residents, is the headquarters of rapidly expanding ecommerce giant Shopify, and is churning out large numbers of tech grads per capita.

Like other Canadian tech centres, it remains one of the most cost-effective cities in North America in which to run a tech company.

Calgary vaulted onto the rankings at No. 34, a coup for the city which has traditionally been dominated by the oil and natural resources industry.

Several years of courting tech businesses, and growth within its existing sector, is finally paying dividends even as much of the city, and the province of Alberta, reels from the twin impacts of the extended oil slump and the COVID-19 pandemic.

Ontario’s Waterloo Region, long known as a tech hub among smaller urban centres, vaulted into the top spot in the Next 25 Market rankings for “lesser known or underdeveloped U.S. and Canadian markets.”

In this ranking, Quebec City came in at No. 6., Edmonton at No. 9 and Halifax at No. 12.

“We expect that most tech-talent hubs and professions will thrive after the pandemic subsides, and many that facilitate remote work, e-commerce, social media and streaming services may have even greater growth opportunities accelerated by the COVID-19 disruption,” said Colin Yasukochi, executive director of CBRE’s Tech Insights Center, in the commentary.

“Markets that have strong innovation infrastructure – leading universities and high concentrations of tech jobs — will lead the next growth cycle.”

What follows are a few observations about Canadian cities featured in the report:

Montreal

Despite rating as the least expensive major city in North America in which to operate a tech business, the city slid three places overall. That 500-person company leasing 75,000 square feet of space would spend about $40 million annually to run its operation in Montreal.

“Montreal has a vibrant tech sector, but we’ve dropped a few places in the overall rankings, which is a reminder that the tech sector is extremely competitive, and we need to capitalize on our potential in this area,” said Avi Krispine, managing director for CBRE in Quebec.

Ottawa

Tech talent comprises 11.3 per cent of total employment in Ottawa, placing it at the top of the survey above even the San Francisco Bay Area, at 10.5 per cent. That is more than three times the national average of tech talent density, and represents about 76,200 jobs.

Ottawa is also one of the most affordable of all North American markets (fourth-cheapest of the 50 markets), costing $44.7 million for a 500-person tech company leasing 75,000 square feet of office space. Like most Canadian cities, it benefits greatly from the low Canadian dollar in relation to the U.S. greenback.

On the flipside, however, the study found Ottawa also has a significant brain drain. It says 7,314 students attained tech-related degrees during 2014-’19, but only 1,100 found local tech jobs.

Toronto

The city’s tech sector has been booming for several years, adding 66,900 new jobs since 2014, leaving it second on the continent only to San Francisco. About a quarter of a million people are involved in tech-related fields, the study says.

Toronto is also turning out high volumes of tech grads, with 24,083 degrees earned by students in the city’s institutions during the past five years.

While the city is an expensive place to live by Canadian standards, it still ranks third overall behind Montreal and Vancouver as a cheap location for a business to operate in a North American context.

Waterloo Region

The region’s tech labour force grew by 51 per cent over the past five years, for a total tech labour pool of 22,400. Not surprisingly, tech wages also increased, by 15.7 per cent in the same period.

“Waterloo Region has a reputation as one of Canada’s hottest tech hubs and it’s great to see us ready to take on the big cities in North America with our No. 1 up-and-coming ranking,” said Ted Overbaugh, CBRE’s managing director for Southwestern Ontario. “It’s gratifying to get that global recognition after our market re-tooled seven years ago.”

After the decline of BlackBerry (though the company has retooled its business lines and become a significant tech firm once again), Waterloo’s star was in decline for several years.

Now, with companies such as Google making major commitments and its higher learning institutions turning out thousands of grads annually, it is again gaining momentum.

Tech wages averaged $87,485 in Waterloo Region last year. Wages for the narrower category of software developer averaged $97,651 and tech degree completions in the region totalled 2,707 in 2018.

Calgary

The city has increased its fledgling tech sector by about 17 per cent during the past five years, pumped out 775 tech-related degrees in 2018, and despite being the most expensive Canadian city in terms of company costs, still rates well against U.S. competition.

Compared to other major North American cities where energy is the economic driver, Calgary ranked in the middle of the pack (Denver was seventh, Dallas 13th, Houston 36th and San Antonio 47th).

“This is good news. Period. Calgary constantly talks about diversifying its economy and we’ve proven our ability to compete with world-leading cities in the all-important tech sector,” noted Greg Kwong, managing director for CBRE in Alberta. “Calgary has faced no shortage of economic challenges of late, but this data offers us reasons for optimism and encourages us to continue to lure tech companies and skilled workers to the city.”

Vancouver

Vancouver’s tech workforce continues to expand rapidly, having grown 48 per cent during the past five years to about 84,900. Salaries in the sector have grown about 14% during that time, to an average of $81,931 according to Statistics Canada.

One factor impacting the city’s affordability is the rapid rise in office rents, from about $34 per square foot in early 2014 to $44.29 at the end of 2019. Vacancy was reported at just 3.7 per cent at the end of 2019, though that has eased slightly in the intervening months due to the COVID-19 pandemic.

The city is churning out large numbers of young talent, with about 5,600 tech-related degrees earned during 2018. Almost 50 per cent of the workforce has a bachelor’s degree, or higher.