- City's economy is set to be top performer in Canada this year
- Unemployment rate of 4.5% lowest since '09, least among peers
Vancouver’s transformation from a 19th-century gold-rush and lumber town to a mecca for tech startups and animation design has made it the top-performing city in Canada.
Vancouver’s proximity to tech hubs in Seattle and San Francisco, where companies such as Google Inc. and Industrial Light & Magic are based, is attracting talent and investment in green technology, film-making and visual effects, allowing the former mining center to prosper even as commodity prices tumble, said Mayor Gregor Robertson.
“Our economy has evolved dramatically from the early days when Vancouver was built on resources,” Robertson, 51, said in an interview at Bloomberg’s New York office on Friday. “We’re seeing capital flowing like never before, a startup ecosystem stronger than ever before, and a real buzz in creative industries that are coming of age.”
The tech industry employs more people in the city than oil and gas, forestry and mining combined, he said. As a result, Vancouver’s economy outpaced major Canadian cities this year, a trajectory set to continue. The jobless rate of 4.5 percent in August was the lowest since January 2009 and outperformed Calgary, Edmonton, Toronto, Ottawa, Montreal and Quebec, according to Statistics Canada data compiled by Bloomberg. The Vancouver-based company with the greatest percentage increase in employees in the past year is video software manufacturer Avigilon Corp., according to separate Bloomberg data.
“Vancouver’s economy is not tied to the boom-bust resource economies of other parts of the country,” Robertson said over a lunch that included green salad and beans.
Vancouver’s gross domestic product is forecast to advance 3.4 percent this year, according to the Conference Board of Canada’s metropolitan economies report released Sept. 23, making it the best performer among 13 Canadian cities. Vancouver will keep that top spot for the next four years, the forecasts show.
Local startups include Hootsuite Media Inc., Vision Critical Communications Inc. and General Fusion, a nuclear fusion developer that counts Amazon.com Inc. founder Jeff Bezos among investors. Other firms have migrated to the city, including Microsoft Corp., which opened a training and development center last year, and Industrial Light & Magic, Hollywood director George Lucas’s visual-effects company, which unveiled a 30,000-square foot (2,790 square meter) studio in the Gastown neighborhood last year.
The declining Canadian currency and proximity to Hollywood have helped the film business as well. It began currying a reputation as Hollywood North in the 1980s, with tax incentives for filmmakers. Today, Vancouver is often a backdrop for other cities, passed off as San Francisco, New York, and even countries like North Korea in movies including “Mission Impossible: Ghost Protocol,” “The Interview” and the upcoming “Deadpool.” That requires green screens and visual massaging, talents readily available in Vancouver, according to Robertson.
The new companies, which helped usher in about 15,000 so-called clean technology jobs, are joining traditional Vancouver employers such as gold miner Goldcorp Inc. and West Fraser Timber Co.
“It’s not showing up on the stock exchange, but it is on the street,” Robertson said, who aims to double the number of clean tech jobs by 2020. “Right now we’ve got everything in our favor: we’ve got the dollar low, tax credit schemes that attract businesses, and the talent pool is enormous now. We have a multi-billion-dollar visual effects industry next door to the shooting location.”
The growth of Canada’s third-largest city, with about 2.5 million people in the metropolitan region, has also created headaches for its inhabitants. Housing prices are the highest in Canada, rising 12 percent in the city to an average C$902,365 ($672,904) in August over the prior year. The average price for a detached home has soared to C$1.2 million.
“Our big challenge is affordable housing,” especially for a younger workforce, Robertson said. He’s focused on creating more rental housing, pushing rental as a percentage of new housing stock to 20 percent for the last few years from just 5 percent, and adding incentives for developers to build more affordable options.
Market participants have speculated foreign investors, particularly from China and other parts of Asia, may be driving up prices by buying condominiums and houses to shelter funds and leaving the units empty. With no accurate data on this type of investment it’s hard to assess the extent of the problem, said Robertson, who’s been pushing the British Columbia government to track ownership through its tax collections on real estate transactions.
“We don’t have rigorous data and we’ve been asking the province to collect that data,” Robertson said, adding that “anecdotal feedback” shows there’s “a lot” of empty properties. “Even based on the anecdotal evidence, we think the province needs to take action to deal with the challenges with our housing market.”
If data showed foreign capital is driving up housing prices, he’d support taxing high-end homes, with the proceeds contributing to a fund for first-time homebuyers or a rent supplement.
Although he’s waded into provincial politics, Robertson is staying away from the 2015 federal election campaign -- except when it comes to decisions that affect Vancouver’s squeaky-clean image, such as Kinder Morgan Inc.’s proposed Trans Mountain pipeline expansion that would run through the region.
“The Harper government is being tone deaf to opposition to these pipelines,” he said, saying he still thinks Kinder Morgan’s proposal, which would increase the flow of oil tankers near the Vancouver coast, is disastrous.