Toronto has fallen from third to fifth in CBRE’s latest Scoring Tech Talent ranking of North America’s top technology employment markets despite recording the second-highest employment growth between 2017 and 2022.

The Toronto market added 63,800 tech-related jobs during that period. 

“Toronto has the key ingredients that tech employers are looking for, which is why it's highly ranked,” CBRE’s Toronto-based vice-president of office leasing Liz Nucci said during a July 18 webinar to discuss the report. “The top of the list includes Toronto's high-quality and affordable tech talent workforce as well as its future talent pipelines from local universities and a favourable immigration policy.” 

As an example, Nucci said CBRE recently assisted a global cloud computing company in increasing its Toronto office space from 25,000 to 60,000 square feet.

What the report involves

The report covers 75 North American tech markets, ranks the Top-50 in the United States and Canada and outlines tech labour market trends amid economic shifts and increased remote hiring. 

The scorecard for the rankings incorporated 13 metrics to measure each market’s depth, vitality and attractiveness to companies seeking tech talent, as well as to tech workers seeking employment. Each metric was weighted by its relative importance to job creation and innovation. 

The U.S. added a net gain of 610,000 tech jobs while Canada has added 150,000 since 2020. These include occupations in both tech and non-tech industries such as a software engineer who works for a bank.

“The major theme for this year's report is hiring opportunities for non-tech companies seeking to build their tech talent teams amid a tech industry slowdown,” Colin Yasukochi, executive director of CBRE’s Tech Insights Center in San Francisco, said during the webinar. 

“Tech talent remains a high-demand occupation even during uncertain economic times.”

Canadian cities perform well overall

Five of eight Canadian markets improved their rankings, one held and two dropped. Canada has five of the Top-20 tech talent cities, including two in the Top-10. 

Vancouver, which had the highest tech job growth rate of all cities measured, at 69 per cent, remained No. 8 in the rankings. Ottawa moved up two spots to No. 11 and Montreal rose three places to No. 12 after adding the third-most tech jobs in North America (51,500) after Toronto and the San Francisco Bay Area.

Waterloo Region moved up six spots to No. 18. Calgary — with a 61 per cent tech job growth rate, second in North America — improved seven places to No. 21. Quebec City rose four notches to No. 35 while Edmonton joined Toronto as the only Canadian markets to dip in the ranking, dropping four spots to No. 39.

The markets with the highest tech job growth rates on the continent were all Canadian: the aforementioned Vancouver and Calgary, as well as Waterloo Region (52 per cent) and Edmonton (45 per cent).

Canada’s tech talent workforce grew by 15.7 per cent from 2020 to 2022, outpacing the U.S. growth rate of 11.4 per cent.

Canada’s favourable immigration policies

“Canada has favourable immigration policies with no lottery-based system,” Nucci observed. 

“We have a fast approval process and an accommodative work visa program that brings skilled workers to Canada and in turn expedites permanent residency. This means a more diverse talent pool for companies to hire from.” 

Canada just reached its cap of 10,000 applications for people with valid H-1B Specialty Occupations visas who are living in the U.S. to get an open work permit for up to three years north of the border. 

“Workers with this visa have 60 days to find a new job or leave the country if they're laid off, which is tougher to do in today's labour market when you consider the tech layoffs that have happened over the last year,” Nucci explained.

“To sweeten the deal, Canada plans to provide temporary resident visas for the families of workers who have H-1B visas, which is a massive draw and not something offered in the U.S., where residency status is linked with employment.

“Canada is also trying to attract digital nomads and skilled workers without jobs and give permanent residency to startup founders with VC support.

"The short-term benefit of coming to Canada through this policy is tech workers could be provided with a greater sense of security and support than what the current H-1B visa offers.”

Ottawa leads in tech talent concentration

Tech talent concentration — the percentage of total employment tech occupations represent — is an influential factor in how tech-based a market is and in its growth potential. 

Ottawa led all North American markets by this measure, with tech talent comprising 13.3 per cent of total employment, more than double the Top-50 market average of 5.6 per cent. The San Francisco Bay Area ranked second at 11.6 per cent.

Tech occupations represent 10.1 per cent of total employment in Waterloo Region. Toronto and Seattle tied at 9.5 per cent to round out the Top-5 most concentrated tech markets. 

Costs are lower in Canada

Canadian tech markets continue to boast a competitive advantage over their U.S. counterparts. 

“I think Toronto's best appeal for tech employers is the affordability of talent, where they get the best bang for their buck,” Nucci said.

“This was important before and today I would say it's critical, especially as the cost of wages are typically 15 to 20 times that of real estate. 

“Overall, Toronto has a relatively low cost of operating a business. An office here could cost half of that compared to other North American markets when thinking real estate and labour combined.”

The total annual labour and real estate cost for a 500-person tech company occupying 60,000 square feet of office space ranged from US$32.68 million in Quebec City — the lowest in North America — to US$78.84 million in the San Francisco Bay Area. 

The eight most affordable cities by this measure are Canadian, with Quebec City followed by Montreal, Edmonton, Waterloo Region, Ottawa, Vancouver, Toronto and Calgary.

Higher costs despite real estate reductions

Total operating costs for tech firms increased in 2022 due to higher wages even as many organizations reduced real estate footprints.

“During the early stages of the pandemic, a lot of business migrated online and that benefited these tech companies or tech employers, and they hired a lot of people,” said Yasukochi.

“They hired too many and then pulled back, and when they did pull back they really focused on the key elements of their businesses or which was related to innovation. And they pulled back to their key hubs for that innovation. 

“That tended to be the largest markets of the Bay Area, Seattle, New York, Washington, D.C., and Toronto, where they still maintain a good amount of tech talent. 

“And remote work has also opened up new opportunities for tech employers to hire the best and brightest to supplement their in-office teams.”

Canadian universities play a vital role

Canada’s universities attract both domestic and international students. Nucci said a high quality of life often makes those from other countries want to stay and either join existing companies or start their own, thus hiring more tech workers.

Despite pumping out talented tech degree graduates, Toronto, Montreal and Vancouver still created substantially more jobs than graduates.

CBRE also ranked the next 25 emerging tech markets with strong growth potential on a narrower set of criteria.

Halifax (fourth), London (eighth) and Winnipeg (18th) made repeat appearances on this list, with London seeing 79 per cent growth in total tech employment between 2017 and 2022.