Business

Seattle, Vancouver, eye tech ambitions without borders

Political, academic and tech elite of Seattle and Vancouver are looking for ways to bring the cities closer.
Political, academic and tech elite of Seattle and Vancouver are looking for ways to bring the cities closer. The New York Times

Seattle and Vancouver are like fraternal twins separated at birth. Both are bustling Pacific Northwest coastal cities with eco-conscious populations that have accepted the bargain of dispiriting weather for much of the year in exchange for nearby ski slopes and kayaking and glorious summers.

Yet 140 miles of traffic-choked roads and an international border divide the cities, keeping them farther apart than their geographic and cultural identities would suggest.

Now the political, academic and tech elite of both cities are looking for ways to bring them closer together, with the aim of continuing the growth of two of the most vibrant economies in North America.

“Vancouver has a lot more in common with Seattle than we do with Calgary, Montreal, Toronto, anywhere else in our country,” Christy Clark, the premier of British Columbia, said in an interview. “We should make the most of those cultural commonalities.”

Whether their grand vision of a “Cascadia innovation corridor” – which borrows its name from the region’s Cascade mountain range – ever materializes, leaders on both sides of the border have motives for getting cozier immediately. U.S. tech icons such as Microsoft, with voracious needs for global engineering talent, are expanding their Vancouver offices, partly because of Canada’s smoother immigration process.

For its part, Vancouver wants to bring more U.S. technology companies to the city in hopes of spinning out future entrepreneurs who will expand its comparatively small base of technology companies.

One serious obstacle to Vancouver’s tech ambitions is its head-spinning housing costs. The median price for a detached home in the metropolitan area in August was 1.4 million Canadian dollars (about $1.06 million), a 27.8 percent increase from a year earlier, according to the Real Estate Board of Greater Vancouver. In the San Francisco metropolitan area, the median single family home price was about $848,000, according to Zillow.

But while median pay for tech-related jobs is $112,000 a year in the San Francisco Bay Area, it is just under $49,000 in Vancouver, according to an analysis by PayScale, a compensation data firm. (Some of that discrepancy is due to a drop in the value of Canada’s currency relative to the U.S. dollar.)

“We have San Francisco real estate prices with the incomes of somewhere between Reno and Nashville,” said Andy Yan, acting director of the city program at Simon Fraser University in Vancouver.

On the thrumming streets of downtown Vancouver, signs of the Seattle region’s growing economic ties to the city are hard to miss. A rectangular glass and steel office building with a large Microsoft sign occupies nearly an entire city block, sitting atop a large Nordstrom store (another Seattle brand).

Microsoft says it invested $120 million in its new offices in Vancouver, which opened in June, and expects to spend $90 million more annually on wages and other operating costs. It plans to employ nearly 750 people in the city.

Microsoft is hiring Canadians for the facility, but the country’s more open immigration policies were an important factor in its investment, Brad Smith, Microsoft’s president, said in an interview. Microsoft and other tech companies have long complained that the U.S. education system does not produce enough computer science graduates, forcing them to rely on immigrants from India, China and elsewhere.

Foreign workers in the United States can wait about three times as long for a work visa as those in Canada do, the Boston Consulting Group estimates. And the prospect of Donald Trump winning the presidency has raised concerns among tech companies, because of the Republican candidate’s comments about further restricting immigration to the United States.

“Right now, there’s just a lot of uncertainty about open immigration,” Smith said.

Last month, officials and executives from both cities huddled in a Vancouver hotel to discuss how to enable people, ideas and capital to flow more freely between them.

At the Cascadia conference, Clark and Jay Inslee, the governor of Washington, signed an agreement to deepen the ties between Vancouver and Seattle, including more research collaboration between the University of British Columbia and the University of Washington. Bill Gates, co-founder of Microsoft, and Satya Nadella, its current chief executive, talked about globalization and education.

One proposal to deal with traffic between Vancouver and Seattle was for a high-speed rail line that would whisk travelers at more than 200 mph between the cities in 57 minutes (it can take four hours or more by car). The details on financing the project – which could cost an estimated $30 billion or more – have not been worked out.

A group of Seattle techies proposed a cheaper alternative: a dedicated lane for autonomous vehicles on Interstate 5, the highway connecting Seattle to the Canadian border. The plan – which relies on autonomous vehicles that still need a lot of work – would not shave much time off the commute between the cities, but could make the ride less tedious by letting travelers work or watch a movie, said Tom Alberg, a managing director at Madrona Venture Group, a Seattle venture capital firm, and an author of the proposal.

With roots in timber and shipping, Vancouver’s economy has diversified in recent decades with the growth of film and video game production. The city claims a tech “unicorn” – a startup valued at more than $1 billion – in Hootsuite, which makes social media tools.

But Vancouver remains a relative small fry in tech, with about $1.78 billion in venture capital flowing into local tech startups in the past decade, compared with about $8.9 billion in Seattle, the research firm Pitchbook estimates.

Still, the city’s hoped-for tech boom may hit a wall if it cannot address its cost-of-living issues, which are by some standards more acute than those plaguing other thriving cities. Vancouver was ranked the third most unaffordable city in the world, after Hong Kong and Sydney, in a study published this year by Demographia, a consulting firm.

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