Throughout the pandemic, tech firms seemed invulnerable. Stuck at home, we all shopped on Amazon, watched on Netflix and Youtube, socialized on Twitter and Facebook, and networked on Linkedin. Reality has set in with rate hikes and slowing economy. Led by the drastic cuts at Twitter, many tech firms are cutting back their workforce by thousands or even tens of thousands of employees.
The effect on the Canadian job and leasing market is unclear. I’m always hesitant to apply U.S. trends to Canada; for example, while Amazon has reduced space and even subletted industrial in the U.S., we haven’t seen that trend in Canada. It’s a different market and we shouldn’t assume a one-to-one connection. Job cuts at head offices in San Francisco may not translate to any effect in Edmonton or Montreal.
At the same time... U.S. tech have become big occupiers in Canada, especially Vancouver. While we always think of Silicon Valley (Northern California) for tech, Seattle has a massive sector including Amazon, Microsoft, and Tableau. This has spilled over to Vancouver and driven a lot of office leasing recently. But while we may see a big leasing impact from Amazon, Canada is a small component of their empire (currently <2% of their global workforce).
”Proptech” has also been a hot area for startups lately. We all know real estate runs on access to information, and several firms (highlighted below in yellow) have attempted to create businesses out of real estate data. The focus is generally on residential, not commercial, as it’s obviously a broader market. These firms have suffered greatly with increased borrowing costs and a slower listing market in the U.S., showing real estate tech isn’t immune from the broader economic trends.
The formerly invincible tech industry has seen accelerating job losses in the past month, with significant layoffs at well-known firms such as Twitter, Amazon and Facebook. Real estate firms were among the largest layoffs as a share of employees.