Most of these tech jobs are going to 'foreigners' or new immigrants. But yes, there is definitely a push for downtown office space since they realize it's much easier to attract and retain talent downtown. My wife's company is a tech company and was based in Markham. But moved as it was growing and needed a location where it could attract that talent. She said recently, 'tech fest' beat all expectations in terms of attendance and people in the field. My good friend who was at a Fortune 500 type company moved to a start-up and said he would never go back to a bigger company and said it opened his eyes to what other opportunities were out there.I just read the article Alvin posted. I think it is interesting because it gives some idea of the general size of the tech market within our general office market in Toronto. You can see that Tech still represent a very small niche in terms of the overall office supply but it also is having an outsized influence on present absorption rates.
This phenomenon of Tech office growth is not unique to Toronto. It basically represents the trend in pretty well every city in North America. I'm curious how different the scenario is here or if it is just a reflection of the general trend. What I mean is that there are two kinds of growth trends in business, there is expansion of the pie, and increasing market share within the pie. In Finance for instance we have seen the general industry expand over the last 10 years but remarkably we have also seen Toronto's share of the pie in Canada increase over that period. That is a pretty powerful combination and enough it seems to offset the countervailing trend of greater efficiency in office space use. We may be seeing both also occurring here in terms of tech.
The Tech boom we are seeing now is a great thing but as an investor I also see this office and growth boom as something to watch for in 2018 as a sign of potential hubris, a potential sign of overinvestment in the sector.
Toronto does have the lowest office vacancy rate in N. America. And yes, there are huge explosions in tech in places like Atlanta, Dallas, Orlando, Charlotte and many other cities (which also explains why alot of these old conservative States are turning more liberal and Democratic friendly). The big draw for those newer up and coming tech cities are a certain higher standard of living in terms of housing, warmer weather, buying a car and driving into work. Lower rental rates, taxes, heating costs also make it easier for companies to turn a profit, pay higher, etc.
However, what I think will continue to fuel Toronto's boom is that it has Manhatten like infrastructure (transit in the core, shops, restaurants, city living) that younger people actually like. Alot of those newer up and coming cities as well are more of a downtown in a suburb. Meaning that the transit is more like suburban buses, some rail, mostly driving (I've researched this as part of my job). My wife also works with many and manages a couple of millennials, and my own reading and study on the generation, and they will say, they absolutely LOVE Toronto and all its city like amenities/density. US cities however are more set up to attract people who want to have families, less of that city social life, less density.
This was covered more recently, but does a good job explaining why there's growing interest in Toronto for Tech folks. He specifically compares it to Silicone Valley where it's extremely expensive. And also stuff like Canadian things where you're not beholden to your employer for your VISA, more safety/less paranoia, convenience of not needing a car, better schooling for public school, etc.