How Amazon’s plan to expand will reshape Vancouver’s tech scene

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Thousands of new Amazon.com Inc. jobs in downtown Vancouver will reshape the city’s technology sector by triggering a talent war, boosting wages and driving immigration, local tech leaders say – while further tightening one of Canada’s highest-demand housing markets.

The Seattle-based company is one of many giant U.S. tech firms that have deepened their presences in Vancouver for years, alongside others, such as Microsoft Corp. and Facebook Inc. But Amazon’s new planned offices on the site of Vancouver’s old Post Office building, where it would lease an entire city block with two office towers, is set to make the e-commerce and cloud services company the city’s largest corporate tenant.

The Globe and Mail first reported the new lease Wednesday. The 1.1 million square feet could accommodate as many as 10,000 people, according to real estate industry experts – a tenfold increase from Amazon’s most recent local employment figure. Industry leaders believe there will be long-term benefits as immigrants flock to work at the new Amazon office and newly minted leaders take the skills and wealth they gain there to start local companies of their own.

But the increased Amazon presence is expected to put more immediate pressure on Vancouver’s already tight tech-job market. Statistics Canada and real estate service CBRE reported this year that the city has 75,000 tech jobs at an average annual wage of $80,000. The average Amazon software engineer in Canada makes closer to $90,000, according to the compensation research service PayScale. Adding thousands of new positions in the city, both in tech and support roles, could put a strain on homegrown firms as they either pony up more cash or start bleeding talent.

“That’s not a ripple – that’s a rock in the pond,” said Shamil Hargovan, chief executive officer of Wiivv Wearables Inc., the Vancouver custom footwear tech company. (Amazon declined to detail its latest hiring plans, but had set an earlier target of 5,000 corporate employees in Vancouver before its new lease was revealed.)

With historically low unemployment levels and high demand among both locally owned and global employers, the shortage of tech talent is a long-standing concern in Vancouver. KPMG’s most recent report card for the province’s tech sector notes the industry’s growth is “outpacing the rate at which provincial schools and training organizations can provide new blood.”

Raghwa Gopal, the head of Crown corporation Innovate BC, said that postsecondary education institutions are fully aware “they won’t be able to produce talent as fast as companies are consuming it.” But he hopes that coding camps and other skills-retraining programs offered by groups such as Brainstation and Lighthouse Labs will encourage mid-career Vancouverites to join the growing tech sector.

The staggering number of positions Amazon could hire would also undoubtedly encourage more immigration to the Lower Mainland, Mr. Gopal and other leaders say. The Innovate BC head said he believes that two fast-tracking programs for skilled immigrants, British Columbia’s provincial nominee program and Ottawa’s Global Skills Strategy, will help Amazon and others hire the workers they need. Local organizations such as VanHack also help connect foreign workers with local employers.

In Vancouver, however, increasing the population comes at a heavy price – literally, given its sky-high housing prices even after the market’s peak. Thousands of potential new Vancouverites would translate to even higher home and rental prices and longer commutes. Some executives worry they might have to eventually consider opening or expanding in other cities.

But Greg Smith, CEO of online-course platform Thinkific, says he believes that such advance warning of Amazon’s hiring plans could also give local developers more certainty to build in the city sooner to increase the housing supply before it’s too late.

Like many other local tech leaders, Mr. Smith recognizes that Amazon’s massive plans will undoubtedly cause short-term strain, but ultimately boost Vancouver’s reputation as a global tech hub. "It makes it easier to go hire someone in Brazil and bring them here, because we’re more present in the media that way,” he said.

“It’ll help our tech sector mature," added Carl Schmidt, co-founder of the website landing page sales platform Unbounce Marketing Solutions Inc. Jay Rhind, partner at Vancouver’s Rhino Ventures, pointed to the “entrepreneurial engineers” that build their own companies after leaving Big Tech giants in Seattle and San Francisco: “That’s why innovation still exists there."

Not all skilled tech workers will get excited about the corporate culture at a company the size of Amazon, either. The company has a reported reputation as a tough workplace – not just in its warehouses, some of whose workers went on strike for Black Friday, but in its corporate office as well.

And despite the massive scope of its new Vancouver lease, it will effectively be a branch office of a company with tens of thousands of employees worldwide, making it a hard journey for those who want to quickly rise through the ranks.

“There are much more accelerated opportunities for development when you’re part of a smaller organization,” said Ryan Donovan, the senior vice-president of product and technology at social-media management platform Hootsuite Inc., one of Vancouver’s most well-known tech companies, which has more than 500 employees in the city.

Having lost several employees to Amazon in the past, Wiivv CEO Mr. Hargovan is aware that they offer “a crazy amount of money." But he pointed out that startups have a tool in their arsenal that can be equally or more attractive than massive salaries: the chance to own an early stake in a company that could blow up.

And he believes that the increased competition for talent in Vancouver will make more entrepreneurs be generous with company equity. It’ll be competitive, but “the very best founders and businesses will attract and maintain the very best talent.”

Some executives speculate that Amazon’s competitive wages will boost salaries across the city’s tech sector, too. But that would come with a caveat: Lower-income workers would be further pushed to the margins in an already expensive city.

“It’s the ability to meet people outside of tech that is also still a draw” to Vancouver, Mr. Hargovan said. “The worst thing to happen to Seattle and San Francisco was this override of tech, meaning people in other fields couldn’t live in the area any more.”