Mobile gaming company Magmic chose a heritage building in the ByWard Market in Ottawa for its headquarters, rather than the suburb of Kanata, where the city’s tech industry has traditionally congregated.Adam Stanley/The Globe and Mail
John Criswick is wearing a black T-shirt, a blazer, jeans and some well-worn Nike running shoes. In his office on the fourth floor of 126 York St. in the downtown ByWard Market here, there are stacks of paper on his desk and a lone lamp illuminates one corner.
Outside his office is mostly silence – a team of developers, designers and a small administrative staff tap away quietly on their computers – and the smell of popcorn is in the air.
This is where the magic happens. Or in this case, Magmic.
That's the name of the mobile gaming company of which Mr. Criswick is the chief executive officer.
Established in 2002, Magmic was once a company of 110 people but dropped to 55 after the 2008 recession. Magmic scaled its operation to one floor from three in one of the ByWard Market's many heritage buildings.
It has stayed loyal to the lively core neighbourhood throughout its history and resisted the pull of Kanata, the long-time hub for technology offices about 30 minutes west of downtown Ottawa.
Mr. Criswick, who once worked at onetime tech giant Nortel Networks Corp. in Kanata, says he would never move Magmic's office to the Ottawa suburb unless he gave his staff about "two years' notice."
For him, the Market gives his employees variety and a lifestyle. "Talent usually gets it right away; they like that it [the office] is in the Market," he explains. "I would say the employees have access to anything they need."
Other companies, particularly tech startups, have also warmed to the area that's full of trendy restaurants, coffee shops and nightclubs, and is close to shopping, culture and Ottawa landmarks such as the Parliament buildings. Demand for space in the Market has driven the vacancy rate to 5 per cent, compared to Kanata's 12 per cent.
Bruce Wolfgram, vice-president of Primecorp Commercial Realty Inc. in Ottawa, says Kanata has traditionally been the main high-tech area in the city, but over the past five years a strong interest in being downtown has developed.
"What we've found is that younger millennials coming to the work force want to have live-work-play," he explains. "The challenge becomes, once you've hit a certain size, there are not many options left in the Market or downtown that are affordable."
Ottawa Mayor Jim Watson agrees, regarding the young work force in the city.
"Kanata is still the largest concentration of where tech companies are, but we're seeing an interesting growth in the market," Mr. Watson says. "From an employee attraction point of view, a lot of the people in high tech are younger, and they want to be close to an urban core."
From a cost-to-lease perspective, Kanata space is about $20 a square foot, whereas the ByWard Market is about $30, according to Mr. Wolfgram. The offices in Kanata are, on average, much larger and suitable to the tech giants and multinationals that have traditionally located in suburban locations.
"The Market is becoming more vibrant, whereas Kanata has always been volatile," Mr. Wolfgram says. "At one point it was zero per cent – in 1999, before the dot.com boom. Every square foot of space was occupied."
To be sure, Kanata is still king for tech tenants and a huge player in the region's commercial property market – 14 per cent of the capital region's total inventory for leasing is there. "Tech is contributing positively to other parts of the city, but it's mostly concentrated in Kanata," maintains Shawn Hamilton, vice-president at CBRE Ltd. in Ottawa. "[Companies] need space, and they need suburban space. That's what is driving people to Kanata."
But the ByWard Market has momentum and could be under even more demand as the next (and growing) wave of startups comes on line. The biggest challenge might be where to put them all if they insist on downtown digs.
According to a study commissioned by Jones Lang LaSalle (JLL), venture capital funding for the IT sector in Ottawa through the third-quarter of 2015 has already surpassed 2014 levels.
"There's a bit of a community there, if you will," explains Ransome DrCar, a practice lead at JLL in Ottawa. "There are a lot of very young companies, and as they mature, they're going to need to go where the product is, and the question is whether they are going to build product downtown or go elsewhere."
Thomas Forr, national research manager for Canada at JLL, explains it was very difficult for companies to locate downtown more than 10 years ago in Ottawa, because there wasn't that much talent there.
"Now you see more young people move into the downtown core," he says. "There are more amenities and more options for people to live and work there."
Although Magmic is more established, it works with a lot of startup developers as the official licenser of mobile games for brands such as Mattel and Rubik. Magmic has financed approximately $1-million in game companies locally.
At first, people told Mr. Criswick he could never establish a digital game company in Ottawa, so it became part of the challenge to prove to them he could.
"The intent was to put Ottawa on the map, which I did," he says. "I want to attract more talent to Ottawa and keep it in Ottawa."
Approximately 30 per cent of residents who live in the ByWard Market are, according to the Ottawa Neighbourhood Study, between the ages of 20 and 29, which is about double the 14.4-per-cent average for Ottawa. Sixty-five per cent of those residents are renters, as opposed to the city's 32-per-cent average. It's a millennial space, and that is who companies such as Magmic are reaching out to.
"A lot of companies have been bought out and moved to Kanata and they lost a lot of their employees because of that," according to Mr. Criswick.
Whereas employees downtown have told him they realize: "I'm going to be in the office, but I can go anywhere and do anything."
The Shopify effect
It hasn't happened quite yet, but if there were to be a mass migration of tech offices to the downtown core here, Shopify Inc. would likely be the one credited with setting it in motion.
The expanding tech darling of Canada's capital recently moved from its office in the ByWard Market to Ottawa's newest – and most expensive – office tower at 150 Elgin St., just steps from the War Memorial.
"We started downtown and there was never any reason to leave," says Daniel Weinand, Shopify's co-founder and chief culture officer.
The e-commerce company has grown to more than 900 employees and a valuation of $1.27-billion. It occupies 146,000 square feet at 150 Elgin.
It's a far cry from its first office, which amounted to "a few chairs pulled around a table in the Bridgehead coffee shop on Elgin Street," Mr. Weinand says.
Although he says Shopify hasn't seen much of a trend of tech companies going to the Market, he says the downtown in general offers a variety of properties that have character and are easier to transform into a creative environment.
"Shopify is a huge success story," adds Bruce Wolfgram, vice-president of Primecorp Commercial Realty Inc. "Not all firms have the financial wherewithal to stay where they'd like to stay and continue that live-work-play environment.
"Shopify has confirmed the desirability to be somewhere other than Kanata."