Canadian commercial transactions outdid its year over year by 38% last year, while Toronto accounted for a third of it. What sector is making such a dent in commercial real estate do you ask? Well, the answer is technology and it is growing astronomically in the GTA-- so much so that Toronto has gone from being called the "Silicon Valley of the North" to being coined the new “Silicon Valley”. As those who work in tech around the globe scurry to the GTA for jobs and opportunities, a new opportunity for real estate investors has rolled in too. Tech personnel will have to live somewhere as the booming industry continues to take shape in the GTA and the surrounding area-- this could be your chance to create passive income by becoming a first-time condo investor or by broadening your investment portfolio in these booming regions.
Toronto recently made waves on the web with news that the Ontario capital had become North America’s fastest growing tech market, especially after the $135-million Vector Institute for Artificial Intelligence opened last year. Since then, companies such as Samsung and Rbc have set up AI research facilities here. In January, General Motors opened it’s Markham based Technical Centre and this past September, Uber joined the party with a $200 Million commitment to building a new engineering hub that will employ 500 workers. Two days later, Microsoft announced plans to invest in a major new downtown headquarter for its Canadian operations, which has all cemented The Greater Toronto Area as a serious player in the tech industry and a breeding ground for innovation.
From 2012 to 2017, Toronto added almost 85,000 jobs in technology, more than silicon valley and most of any North American city, according to reports from CBRE. The agency now ranks Toronto as the fourth most important tech hub in North America-- up from 12th place just two years ago. The influx of tech companies and ambitious startups performing on a global scale are major pulls to bolster a field of professionals in the Greater Toronto Area. In the past, the Canadian tech industry was constantly drained of talent by major U.S technology companies like Google, Facebook and Microsoft. Now, with tech giants opening up headquarters here, investors will begin to see an inundation of skilled workers from all over the world flocking to the GTA and its surrounding area.
A year ago, the government earmarked $125 million for its Pan-Canadian Artificial Intelligence Strategy. That same year, it set aside nearly $1 billion for the five innovation areas of concentration research and development designed after Silicon Valley. Although it’s been over 14 months later and the funding is still being straightened out, many businesses have begun to take advantage of the plan’s two-week, fast-track visa, that prioritizes highly skilled workers and entrepreneurs. The best and the brightest around the world are being wooed by all that is happening here on our technology front and the government has made it easier for businesses to bring in international workers. Along with Uber’s announcement, CEO Dara Khosrowshahi talked about ramping up its operations in Toronto over the next several years and relocating dozens of staff here from around North America. This will ultimately deepen the talent pool, yes, but it will also increase population and demand for living accommodations.
The GTA and its surrounding areas are beginning to be viewed as an elite locale to live, work and play in North America, where talent and capital have concentrated. Many tech firms have historically set up shop in Downtown Toronto’s west side, which has seen major condominium development in the past decade, but as this sector continues to grow, the provincial government is preparing for the future housing demand-- and so are we.
The following areas are set to see tech expansion in the coming years-- so we've curated a list of upcoming residential projects for you, the savvy investor, to get acquainted with.
This area continues to see exciting revitalizations that will brand it as a world-class destination. Recently Sidewalk Labs, a Google-affiliated company, announced it had chosen East Bayfront as the location for its new technology-based neighbourhood. Deemed "Quayside," this 12-acre stretch will feature residential homes, offices including Google’s Canadian headquarters, cultural spaces and a new street network, all based on cutting-edge technology.
Some of the features planned for this world-renowned project include self-driving taxis, robotic waste-removal vehicles, modular housing and weather mitigation features, including the possibility of heated surfaces. This unique project has the potential to brand the neighbourhood as a truly world-class technology hub.
Rumour also has it that MaRS Discovery District, which houses companies such as AirBnB Inc. and Merk & Co; along with hundreds of entrepreneurs racing to commercialize science, is scouting for more space in Toronto’s east end. East Bayfront could potentially be the location of their new home.
Innovations aside, 32 per cent of residents here are homeowners, while 68 per cent are renters, making it a great location to consider for an income property.
The city of Toronto is the financial and business centre of Canada, generating more than 310 billion annually which accounts for 19% of Canada’s GDP. Of the 800 largest corporations in Canada, two-thirds are in the city of Toronto alone. Need we say more? The region offers many advantages, including low corporate taxes, a diverse economy and a skilled workforce. Development companies like Allied Properties REIT plan to invest $1 billion to meet Toronto’s tech office demand by developing its mixed-use master-planned project called The Well, at King St. West and Spadina Ave., in an area densely populated with mission-driven tech startups. According to CBRE, “Toronto has over 241,000 tech workers, representing an increase of 51.5% over the past five years. Tech industry growth has accelerated demand for downtown Toronto office space, pushing vacancy down 2.9% in Q2 2018, the lowest on record for the city and across North America”. Business is and will continue to boom in downtown Toronto.
Markham was proud to be a part of the bid for Amazon’s headquarters which demonstrates the city’s strength as a region to compete globally. Although Amazon has announced that their latest headquarters will be built in New York City and Virginia, the fact that the city was on the list says a lot. Markham is the largest ICT sector concentration per population in Canada. York University has recently opened up a new campus, and a number of leading financial services and data centre companies have become new city residents. Markham also has the lowest commercial and industrial tax rates in the GTA. Within 45 minutes workers can arrive at the international Airport and mass transit is directly accessible from most commercial office buildings. Approximately 60% of the residents here have a post-secondary education and GM’s new Canadian Technical Centre has officially opened, further solidifying Markham's position as a high-tech hub. Of the 10,400 companies in Markham, the city is home to global tech leaders, IBM, AMD, GM, Huawei Technologies, Lenovo, Toshiba, CDI, Qualcomm, Redline Communications and Real Matters.
Kitchener has become one of Southern Ontario’s tech industry centres too. This new tech sector is centred around a building with symbolic and historic importance. The Lang Tannery building is a massive industrial building that was acquired by Cadan Inc. in 2007, and they’ve since converted it into a hub for digital media companies, including the industry giant Google Inc. among its tenants. The savvy investor will be excited to see the level of commercial development coming to this emerging market. The city is seeing tremendous growth since the hugely successful redevelopment along King Street, and this can be seen in the $1.2 billion in building permits for the surrounding area. This is exactly the type of thing investors should be looking for; an emerging market that’s received a huge investment. There’s no doubt that there’s a higher ceiling here than most of Southern Ontario.
Oshawa is well on its way to being a major player in the tech sector. A recent announcement is set to position the City of Oshawa and the Durham Region to become a hub for autonomous vehicle development and testing. The Ontario Centres of Excellence, along with provincial funding, is set to put up to $5 million into developing the region into six Regional Technology Development sites. This development project is aimed at accelerating not only autonomous vehicle technology, but also creating a talent pool to service the industry as Oshawa invests in positioning itself as a more tech-focused city. This 262-acre project will be a business park located in the area between Oshawa Creek and the Whitby-Oshawa boundary, and Taunton Road West and Highway 407. This development could potentially become a hub for tech development in the city. Not to mention, the University of Ontario Institute of Technology also calls Oshawa home and as the tech industry begins to offer more jobs, enrolment and the need for off-campus rentals are sure to go up.