Is Toronto Poised to Become Too Expensive for Startups?

Downtown Toronto is an awesome place for startups.
There are lots of warehouses that have been converted into beautiful bricks and beam offices. With easy access to transportation and a seemingly endless number of condos, it is a great place to set up business.
The question is how much longer will startups stay in downtown Toronto.
As commercial and residential rents increase, downtown Toronto is an increasingly expensive place to operate. Toronto’s emergence as a “world-class” city could be the kiss of death for startups downtown.

I’m already seeing indications that startups are looking farther afield for less expensive office space. I recently visited an entrepreneur heading up a fast-growing startup on St. Clair, who mentioned other startups in the neighborhood. I met another startup that has an office in a co-working space in North York. I heard about a 10-person startup in a two-bedroom condo: the owner/founders have one bedroom, while employees working in the second bedroom and living room
Slowly but surely, startups are locating in places where rents are more reasonable. These places are not as sexy as Spadina/King but they are functional and have good access to public transportation.
If Toronto keeps getting more expensive, the only startups downtown will be VC-backed. Even then, you have to wonder about how much money a startup should invest in real estate when there are other priorities.
In a few years, startups may be an anomaly in downtown Toronto so let’s enjoy them while they’re still around.

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