Where More Money is Coming From! It’s Not Where You Think It’s From…

We are in the midst of the Fall market right now and I can say that it is most definitely a healthier and stronger Fall market than that of 2017. The freehold market is in good shape, but it is the downtown Toronto condo market that is seeing a shortage of listings relative to the sheer demand of end-users. I don’t foresee this demand letting up as the number of listings coming online is far too small to keep up with the high demand.

Up, Up and Away – Last week, for the first time ever, the downtown Toronto condo market crossed over the $1,000 per square foot mark (on average). So, where does the pricing go from there?

It’s going to be a tough pill to swallow for most people, but I honestly think the prices will continue to grow from here.

Narratives and Theories – Years ago, there was a narrative about foreign investors buying up a lot of condos and it was driving up the prices. To date, there is still no concrete evidence to prove that theory. However, from anecdotal evidence and experience from my perspective, there was some, but not enough to really push it through the roof.

Presently, that narrative is slowly starting to change. Whether you believe it or not, a good portion of the real estate community genuinely believes that Toronto is on a cusp of a super-speed growth trend over the next 5-10 years. This is just the start.

Toronto – The Next Silicon Valley?! Toronto has quietly risen through the ranks to become the fastest growing tech hub in all of North America. In the last 5 years, Toronto has added over 80,000 jobs in the tech sector – that’s more than Silicon Valley! The following is an infographic showing you the number of tech jobs in each major metropolitan centre. We’re at number 4! Two years ago, Toronto was at number 12!

Grand Openings – Within the last month, 4 big names in the tech sector just announced that they will be opening up offices in Toronto.

  • Microsoft: The software giant will be taking up 4 floors of the New CIBC Square office tower at 81 Bay Street. About 500 employees will be occupying this space. The office tower is scheduled to be completed in 2020.
  • Uber: The world’s largest taxi company will be making a $200 million dollar investment in Toronto for self-driving research. Uber will be increasing their employee count from the current 200’s to the 500’s employers over the next 3 years.
  • Intel: Super large processor creator, Intel, will be opening a research department in Toronto with the end goal of creating their own graphics processor units (GPU) to compete with fellow Toronto companies, Nvidia & AMD.
  • University of Toronto & Vector Instuite: Vector Institute is a company dedicated to artificial intelligence (AI). Together, they will be both buildings a 14-storey tower for AI and entrepreneurship right on the grounds of the University of Toronto, St. George campus.

Why They All Want In – If the above doesn’t scream major growth, then I don’t know what does! Let me lift the curtain a bit more to let you know why all of these major companies are coming to Toronto.

  • For these US-based companies, the Canadian currency is lower, so it reduces their overhead even if they overpay on salaries for Canadians. Simply put, we are more affordable than our US counterparts.
  • Our government immigration policy is significantly easier to pass, especially if you are a highly skilled worker.
  • Our talent pool is ridiculously good. The University of Toronto and the University of Waterloo produce some of the top tech talents in the world!
  • Above all, the underlining reason is this: Toronto, in the last few years, has quietly become the hub for Artificial Intelligence (AI). If you didn’t already know, AI has become the new hot trend in tech as every company is trying to incorporate this new technology into their product and service offerings.

All About That AI! Uber’s investment in Toronto is strictly for AI-based research for self-driving cars. The University of Toronto and the University of Waterloo now have dedicated programs for AI. Toronto is the epicentre of it all for AI and this is why all of the major tech companies want to come here. Hiring talent locally has always been easier.

To illustrate an example of how competitive the acquisition of AI talent has become, let me tell you a story. A good friend of mine from University runs an AI company in the finance sector. He’s been growing his company and is constantly trying to acquire more employees skilled in the area of AI. The entry-level salary for AI in Canada is close to $100,000 per year. Yes, that is entry-level salary that we’re talking about. He was about to hire a great candidate but lost out because a larger company (which cannot be disclosed here) gave the candidate a 6-figure signing bonus! It is as we call it… an irrefutable Godfather Offer!

The Wrap – So folks, that is the type of money coming to Toronto over the next 5 years. It’s not foreign investors anymore, it will simply come from the local talent that is born and raised here. The foreign investment will be these large tech companies coming to Toronto to poach our AI and tech talent. This is going to be the new uprising. All of their headquarters will be located in downtown Toronto, with a large portion of them being on King West. By the way… if that isn’t a treasure map of where to invest, I don’t know what else is!

P.S., Don’t forget – a large Alphabet company by the name of Google is building a mini city in downtown Toronto in the next few years as well!

Until Next Time, Happy Real Estate-ing

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