The mystery of how Canada attracts so many big tech companies was revealed in a commercial real estate analysis. The country scored 5 spots on CBRE‘s 2020 list of Top 50 Tech Hubs. High-quality labor is one of the key reasons real estate prices haven’t been a drag. The other is Canadian tech workers make less than even much lower US tech employees. This more than offsets the high real estate prices, with labor taking the cost hit.
Canada Is Home To 5 of The Top 50 Tech Markets
Canadian cities took five of the top 50 spots on the CBRE tech scorecard. Toronto came in fourth when it comes to overall appeal for tech firms and talent. The only cities to rank ahead were San Francisco, Washington DC, and Seattle — in that order.
Not far behind is Vancouver, taking the 12th spot for overall score. Ottawa’s overall rank wasn’t far behind, at #14. Rounding out the rest of Canadian cities in the top 50 were Montreal (16), and Calgary (34).
It Costs A Lot Less To Hire Canadian Tech Workers
Canadian tech employees are some of the highest quality and have the lowest pay. Five cities in Canada ranked in the Top 50, all with labor quality scores of “high” or “very high.” Those cities took the bottom 5 spots for pay, making them an extreme value. Much lower quality engineers in Baltimore and Hartford make almost 2x Montreal.
Tech Talent Quality vs. Cost Analysis
Average annual salary for software engineer (US$).
Source: U.S. Bureau of Labor Statistics, April 2019, Canada Statistics April 2019, U.S. News & World Report, CBRE Labor Analytics, CBRE Research, 2020.
Canada’s Low Wages More Than Make Up For Expensive Office Space
Running a large tech firm is significantly cheaper in Canada than in the US, just not the office space. Using a sample cost sheet for a 75,000 sqft office with 500 employees, Canada took the bottom spots for total costs. Despite this, the rents were actually some of the highest of the tech hubs.
Vancouver and Toronto showed the biggest gap. Vancouver’s office space was the third most expensive of the top 50 markets. However, the city’s expensive office space averages out with low wages, to make it the 49th most expensive out of the 50 cities. Or the second most affordable… for employers.
Toronto office space similarly was one of the most expensive of the markets. The study estimates office space is the 12th most expensive. However, it’s the third-cheapest when you consider the total cost.
Canadian tech hubs are high quality and low cost to operate, which explains the inflow of big tech. Real estate prices are some of the highest on the list, but offset by the low wages. Great for tech firms, but not so much for the labor. Sounds like trouble if the employees realize they can move… or work from home.
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