Suburban Growth in Ontario’s Mid-Sized Cities

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Photo by Samuel Bietenholz

Mid-sized cities are having trouble keeping people downtown and encouraging denser living. The Martin Prosperity Institute issued a report analyzing growth patterns for  six Ontario cities: Kingston, Kitchener-Waterloo, London, Windsor, Hamilton, and Oshawa. They found the following:

From 2001–2006 (this is the most recent data available for community profiles) most of the population growth taking place in these municipalities occurred in outer suburbs.

 

Percentage of population change, 2001-2006 by area.  Source: Martin Prosperity Institute

Percentage of population change, 2001-2006 by area. Source: Martin Prosperity Institute

Even more discouraging for urbanists is that the report found that in the five year period, the population of these city centres and inner suburbs was declining. The author concludes:

This discovery runs counter to the provincial policy put in place to stem sprawl in the past decade, and indicates that something is awry with Ontario Smart Growth policy implementation.

While these findings are interesting, I wouldn’t rush to judge the Smart Growth policy implementation. The Growth plan was only implemented in 2005. Looking at data from 2001-2006 would therefore not have captured any significant changes in growth patterns caused by the Growth Plan. Growth patterns take decades, not years to change, and many municipalities only implemented new growth plans in the last four years.

Yet, I wouldn’t be surprised if Ontario’s mid-sized cities will continue to grow outward instead of upward. There are several reasons for this. First, mid-sized cities tend to be far less dense compared to large urban centres. Therefore, the amenities and employment opportunities commonly associated with density in larger cities are less likely to exist.

Lower densities also mean that public transportation systems in mid-sized cities tend to be far smaller and less convenient. Congestion is relatively mild and commuting by car is quick and convenient. Commute times in these six cities averages 24 minutes (Toronto is 33)  and only an average of 8% of people get to work using transit. Because most commuting is by car, employment and shopping is centred around locations that are easy to get to by car, not downtown. This encourages growth at the fringe were land is cheap and accessible and makes attracting jobs and residents to mid-sized downtowns far more challenging.

While I wouldn’t rush to judge the outcome of Ontario’s Smart Growth policy in mid-sized cities, it is clear that the challenges facing Ontario’s mid-sized cities in promoting smarter communities and reducing auto dependence are significant.

Suburban Corporate Wasteland

DSC_0379

Good piece on WNPR radio in Connecticut about the future of suburban office parks. There is a growing concern in the United States about large office parks built during the 1970s and 1980s. Many businesses are moving downtown and leaving their old headquarters vacant, leaving fears of a “Suburban Corporate Wasteland” in their wake.

While the piece focuses on a handful of sites in Connecticut, Toronto has recently seen high-profile businesses move to core from the suburbs. For example, Coca-Cola is moving downtown, leaving its “mad men” era building in the Thorncliffe Park neighbourhood. Other companies that have made or are about to make the move include SNC-Lavalin, Google, Deloitte, and Telus. This has lead to articles such as “Why corporation are flocking back to downtown Toronto.”

The Urban Land Institute has picked up on the trend and is bearish on suburban office markets in Toronto. Their 2014 Emerging Trends in Real Estate states that:

“‘Related to the trend of urban intensification, suburban office is a declining commodity that has no staying power,’ says an interviewee. Suburban office is becoming less competitive as companies return to the urban core and companies take less space. As this space becomes vacant and needs to be refurbished to be competitive, the suburban market softens even further.”

So are Toronto’s office parks likely to become corporate wastelands?

I’m not ready to write them off yet. A recent Canadian Urban Institute (CUI) report provides a very detailed assessment of the evolution of the office market in the GTA. The CUI argues convincingly that the statistics do not prove that the 25 year trend of significant office growth in the suburbs is slowing. 

While demand is shifting to the core it hasn’t disappeared from Toronto’s suburb. Yes, vacancy rates are higher in the suburbs than downtown, 7.8% versus 4.6%. But as seen in the chart below most of the new office space built since the 1990s has been in the suburbs. With so much growth in supply it’s not surprising that vacancy rates are higher.

Cumulative Totals of GTA Office Space 1910-2010 by the Canadian Urban Institute (Click to Enlarge)

Cumulative Totals of GTA Office Space 1910-2010 by the Canadian Urban Institute (Click to Enlarge)
Note: 905 and 416 are Torono Telephone Area Codes. 905 is shorthand for those areas that have grown quickly since the 1970s. 416 for those areas that grew from the 19th century to the 1960s . 

Furthermore, while major moves to the core are attracting attention, building has continued in the suburbs. Major companies such as SNC-Lavalin, PricewaterhouseCoopers and Novartis Animal Health have been expanding or adding new offices in suburban centres such as Meadowvale and in Mississauga Town Centre.

While suburban office parks are becoming corporate waste lands in Connecticut, in Toronto it looks as if they are here to stay. The challenge in the GTA won’t become how to deal with large vacant office campuses, but how to bring transit and amenities into these areas so they can stay competitive and become more adaptable, diverse, and accessible.

America’s Super-Sized Cities

Brian Lee Crowley wrote a piece advocating for more road construction to ease traffic congestions. He points to the example of American cities, which he claims reduced congestion by building more roads. What he fails to mention is that as a result American cities are super-sized, struggling with the cost of maintaining large spread out cities and an already overbuilt road network.

A report by the Lincoln Institute of Land Policy shows that American cities take up way more space than cities in any other country by a significant margin.

Twenty Countries with the Largest Areas of Urban Land Cover, 2000

Crowley laments the costs of transit but fails to point out that it is also very expensive to build enough roads to relieve congestion. Using the same Texas Transportation Insitute data referred to by Crowley, researchers analyzed traffic conditions in 70 metropolitan areas and found that regions that spent a lot on road capacity expansion did no better than those regions that spend far less. The researchers estimate that households would need to spend thousands of dollars annually to realize reductions in congestions.

The costs are starting to catching up to Phoenix, Arizona, Crowley’s model of how building roads can reduce congestion. Arizona is currently booming, and spending far more on the construction of new highways than maintenance. The result is a significant and growing state of good repair backlog and higher road costs for residents in Arizona. Just to maintain the current pace of construction, the state needs to spend $62.7 billion over the next 25 years. This does not seem sustainable and eventually the cost to maintain existing roads will eat into the cost of building new roads.

Crowley is right however that North American cities have not successfully reduced congestion using transit. So why is transit investment not a viable fix for congestions in North America, when it has clearly worked in other places? Basically it’s because we haven’t really invested in transit and built land use patterns that support transit. Our cities may build one or two lines, but no city outside of Toronto, Montreal, Mexico City, or Washington has really invested in a comprehensive transit network on the continent since World War Two.

Even in the first two of those cities, investment essentially stopped 30 years ago. For example, Toronto has built half a subway in a generation, the bus network is static, and their are fewer streetcars plying downtown routes than in the 1980s. We haven’t done anything to increase transit capacity so no wonder congestion is getting worse in Canadian cities.

The truth is that reducing congestion, whether by building roads or transit is expensive. Just as regions need to spend thousands of dollars per household on roads to reduce congestion, regions would need to spend thousands of dollars on transit to achieve the same ends. It’s very difficult, in fact almost impossible, to build your way out of traffic. The fact that households are not willing to cover the costs makes it a lot harder. That is why most policy makers now focus on far more cost effective transportation demand management strategies instead of building more kilometres of transit and road.

It’s no surprise that in North America we see highway construction as being the answer. As can be seen in the chart below, it is where we have put our money. If we start really investing in transit I know we would see results without having to supersize our cities.

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Southern Ontario’s Geography of Innovation

Comparison of Toronto Waterloo Region and Silicon Valley San Francisco Corridors

Click to Enlarge

The cities of Southern Ontario are doubling down on innovation clusters and commuter rail to help drive the growth of downtown’s and meet the employment and density targets set out in the Places to Grow: Growth Plan for the Greater Golden Horseshoe.

A City of Guelph business case to invest in a two-way urban commuter rail line between the City of Toronto and the cities of Waterloo, Kitchener, and Guelph focuses on supporting and developing innovation clusters.

The business case draws parallels to the  Silicon Valley regional economy, which led to the very interesting map above that shows the similar geographic size and scale of both clusters.

The most significant noted difference between the two regions is that Silicon Valley has a two-way commuter rail service, while the Toronto-Waterloo corridor does not.

The City of Guleph argues that  to truly compete with Silicon Valley the Province of Ontario must invest in regional transit to improve regional connectivity:

Two-way GO Train service would be a catalyst in converting the current, disconnected startup ecosystems into one large and internationally competitive corridor of innovation. This connected supercluster would have the capacity to compete head-on with not only Silicon Valley, but other global markets. It would generate sufficient productivity and employment gains, and related corporate and personal income tax growth, to finance the capital and operating cost of the required rail infrastructure. It would also accelerate urban intensification and enhance sustainability — both key provincial objectives.

The plans below show that the cities of Guelph, Waterloo, and Kitchener expect that regional rail and the Region of Waterloo’s LRT (ION), which is now under construction, will anchor their city centres and lead to a significant redevelopment of vacant and underutilized land.

(Click the Images to Enlarge)

Why is transit and rail such an important part of the plan to support the innovation clusters?

Planning scholars Daniel Chatman and Robert Noland  have shown that there is a strong relationship between wage increases and the availability of transit. Specifically:

“wage increases range from $1.5 million to $1.8 billion per metropolitan area yearly for  a 10 per cent increase in transit seats or rail service miles per capita”

As a result the City of Guelph estimates that investing in full-day, two-way regional rail service between Waterloo and Toronto will have a regional impact of $838 million in personal income tax annually. In addition to those benefits it will help these cities develop their downtowns.

Whether that would lead to more vibrant downtown is still a matter of debate.  But overall, the business case for improving connections in the region is very compelling and worth exploring.

The suburbs aren’t great for small business and free markets

DSCF2529Prewar neighbourhoods are better suited for migrant entrepreneurs than postwar neighbourhoods. That is the conclusion of a fascinating new study by Pascal Beckers and Robert C. Kloosterman, which looks at the link between the design of neighbourhood, zoning, and it’s effects on local migrant businesses.

What Beckers and Kloosterman find is that the urban design and zoning has an impact on the chances of setting up a business and the success of that business in the five Dutch neighbourhoods that they studied.

Prewar neighbourhoods have more commercial spaces (55 vs 31 firms per 10 hectares of built-up area) and less restrictive zoning regulations. This was found to offer more choice to local entrepreneurs and more flexibility to adjust to changes in the market and the business than to entrepreneurs who were operating in postwar neighbourhoods. 

Prewar neighbourhoods also have more businesses that are non-neighbourhood oriented, which means that they serve a broader market than just the immediate area (35 vs 16 firms per 10 hectares of built-up area). This is because local regulations in postwar neighbourhoods restrict commercial activities to those that serve the needs of local residents. Therefore, they have a commercial base that is more localized and less diversified

Existing businesses in postwar neighbourhoods also have less competition than those in prewar neighbourhoods. This protects local businesses and enhanced their chance of survival, but more restrictive zoning meant it is harder for businesses to expand if they became more successful. As a result, residents in postwar neighbourhoods have fewer choices when it comes to shopping and services and successful businesses have a harder time building on their success.

On the other hand, businesses in prewar neighbourhoods can be much more flexible. It is easier to convert buildings from residential to commercial and there are fewer restrictions on what can be done in those buildings. Businesses in prewar neighbourhoods also benefit from more policies that focused on creating new commercial space and supporting new businesses.  

More evidence that if you’re looking for competition, choice, and diversity you are much more likely to find it in the city than in the suburbs.

After the Storm: Learning from July 8th, 2013

In 1954, Hurricane Hazel transformed Toronto. The scale of the storm’s devastation forced the city, its residents, and leaders to rethink urban development regulations and to significantly invest in infrastructure to prevent a similar disaster. That investment paid off last week.

Hurricane Hazel revealed many of the city’s vulnerabilities. The lack of serious injury, loss of life, or major damage following the record rainfall on July 8th is a testament to the lessons learned, and actions taken after 1954.  Now it’s time to assess some of the lessons we can learn from this storm, so we can be prepared for the next one. Two major areas for improvement became evident last week, our hydro system and our stormwater system.

Our hydro system

The city’s hydro system is vulnerable to major weather events. During last week’s storm, tens of thousands of people had no power for 48 hours. It’s estimated that 300,000 people in the GTA were without power at one point.  The primary reason for the outage was that one of the two hydro supply points in the city, Manby Transformer Station, experienced serious flooding.

Transformer

Manby and Leaside Transformer Stations are the city’s two supply points
Source: Navigant Consulting Ltd.

Policies and investments should be promoted to build resilience into the hydro system. These can include building another supply point to reduce our dependence and increase the systems flexibility. Chicago, a city of comparable size has five supply points, and Vancouver has nine supply points. I do not think it’s impossible to imagine a scenario, such as an ice storm, where both transfer stations could be compromised.

Another strategy is to produce more power locally in smaller facilities. Markham has built a four-megawatt station, which can serve the Markham-Stouffville regional hospital in case of an outage. The plant is so small the Globe and Mail writes it “looks like an extension of an adjoining parking garage.”

We are also reaching a point where in the next twenty-years when most new buildings could power themselves.  Improving the energy efficiency and adding solar panels means that new buildings could produce more energy than they use. This could add significant resilience to our power grid.

Stormwater Management System

Monday’s storm was an excellent example of having too much water flowing into our sewers and streams. The Don River rose so fast that the GO Transit system had no warning, stranding over a 1,000 people on one commuter train in the Don River Valley.

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Water levels at the Don Valley East Branch hydrometric station near Thornhill July 8, 2013
Source: Globe and Mail

As we pave over more of the region we are seeing more flash floods. The July 8th storm was the second this summer that led to a flash flood in the Don Valley. Urban growth is contributing to this. In 1990, 70% of the Don River watershed was impervious. Today it’s closer to 85%. Every year, more water runs into the river instead of into the ground. As a result, the water flows faster and rises higher.

There are many ways to reduce the amount of impervious surfaces and increase the amount of water that can be absorbed by the ground. In Chicago, over 200 laneways have been retrofitted with permeable paving to let water seep into the ground.  New York is building bioswales, essentially large planter buried in the street, to soak up water before it ends up in the sewers.

New York City Bioswale by ChrisHamby

New York City Bioswale
by ChrisHamby

Seattle, echoing the innovations that will allow buildings to produce their own power, is experimenting with removing buildings from the water grid. At one school, the Seattle Times writes:

The classroom toilet composts and treats waste on site rather than flushing it into city sewer pipes. Water washed down sinks doesn’t flow into storm drains but recirculates to a 14-foot high wall filled with plants, which will eventually soak it all up. For now, excess flows through the wall.

Large-scale engineering solutions and strong land use controls significantly reduced the risk of flooding in Toronto region in the 1950s and 1960s. Yet, looking forward our main challenge will be to improve resilience when these systems fail. We don’t need a couple of big solutions; we need thousands of smaller ones. They require building local capacity by educating residents, and training designers, engineers, and tradespeople to deal with water and power in our homes and neighbourhoods.  This will enable us to be better prepared us for the next storm.

The Texas Doughnut

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Walkable Dallas

Developers are finding interesting ways to respond to latent demand for walkable neighbourhoods. As a result, the future of cities, at least in the south, may look like a Texas Doughnut. At least until cities start mandating more rational parking policies. As the The Old Urbanist, explains, the Texas Doughnut is:

a mid-rise residential liner wrapped around interior structured parking.  The product of on-site parking requirements and building codes which permit cheaper wood framing for lower-rise buildings, these structures have proliferated throughout the Sunbelt, though they can be found, with less frequency, outside that geographic range. To the extent these cities are experiencing urbanization near their centers (hello, Dallas), this is the form that urbanism frequently takes.

So the effect is that developers are building something like the image below, where you hide the parking to produce streets like those above. The streets in front of the building are narrow, walkable, and pleasant to linger on. The Texas Doughnut is an interesting innovation from developers in the Sunbelt who are responding to consumer demand for more walkable places, while still finding ways to meet very prescriptive municipal parking requirements.

Aerial

Texas Doughnut

 

Toronto is Getting Rid of Some Parking

Sheppard Restaurant

Planners in Toronto are going to have an interesting May. Council is debating whether to approve a new casino on the 21st and will also likely debate revenue tools to fund 50 years of transit expansion. While both important issues are being debated, the most significant change in Toronto’s planning system since amalgamation will quietly come into force. On May 8th, Council will enact a new consolidated zoning by-law. Almost a decade in the making, the by-law is three volumes and 1,743 pages. It’s size, complexity, and language mean it really has not gotten the attention it deserves, yet arguably it will have a far more significant impact on the city than the Casino. Generally, the document is pretty conservative and replicates many of the existing by-laws. However, on page 251, Table 200.5.10.10 has a set of rules that should significantly reduce the amount of parking that the City requires, especially along major transit corridors.

The impact of the new parking regulations will be felt most in the former cities of Etobicoke, North York, and Scarborough. I estimate that in places like North York, apartments and condominiums projects are going to see a significant reduction in required parking spots. The chart below shows some estimates comparing the approved spaces for six mid-rise buildings along Sheppard Avenue West with an estimate of how many would be required under the new by-law. With a below ground parking space costing $30,000, an average 15% reduction in the amount required could have a noticeable impact on affordability.

Sample Approved Parking Spots Estimated Required Parking Spots Under New By-law Reduction
Building 1

68

44

-35%

Building 2

93

61

-34%

Building 3

156

136

-13%

Building 4

124

112

-10%

Building 5

161

150

-7%

Building 6

193

176

-9%

Total

795

679

-15%

The change should also make it easier to find better commercial tenants for mixed-use buildings. The by-law is introducing more flexible requirements for smaller retail, personal services, grocery, and eating establishments. All eating establishments, grocery stores, and retail less than 200 square metres (2,152 sq. ft.) require no mandatory parking spots! For some perspective, under the old 1952 by-law it was essentially impossible to have a restaurant in a new condo in North York without a significant parking exemption.The 1952 North York by-law requires 10.20 to 16.95 spots per 100 square metres. Therefore, the owner of a restaurant with a gross floor area of 199 square metres would need to have 21 spots. Under the new zoning by-law, the same restaurant owner can open with zero parking. See why this might shake things up?

Type Old North York By-law (spot per 100 GFA) New Consolidated By-law
Mixed-use Building (residential only)

1.50 (unit)

0.90 (1 bed)

1.00 (2 bed)

1.20 (3 bed)

Office

2.08

1.50

Medical Office

4.17

3.00

Retail

3.57 – 6.67

0 – 6.00

Eating Establishment

10.20 – 16.95

0 – 5.00

The new by-law also establishes parking maximums. Anyone building anything in Toronto under the old by-law can propose to build as much parking as they want. For example, the owner of the 199 square meter restaurant can choose to provide 100 spots. Under the new by-law, where a maximum exists the number of spots will be capped.

It will be interesting to see how the development industry and property owners adapt to the new by-law. But one thing is certain, the city has gotten a much needed reduction in its parking minimums. Not a significant enough change to satisfy the Shoupistas, but definitely enough to effect the way the city will look, feel and move.

Towers and Malls

Cavendish Mall

In my last post I explored the idea that “apartments are just as lucrative in the US as Canada, but the US did not experience the same kind of suburban apartment boom.”  In trying to understand why, I pointed to planning culture  and the nature of each countries development industry. One area I didn’t explore was the difference that the municipal tax structures might have played in encouraging Canadian suburbs to go denser.

Canadian municipalities are far more reliant on property taxes. That means that one of the few ways they can collect more revenue is to grow the property tax base. Looking at the chart from Cote Saint-Luc I used in my last post, apartments made good sense as a revenue generating tool.

Revenue

American municipalities do not have the same dependency on property taxes. Sales taxes are an important  revenue tool for many American cities. This means that the incentives in Canadian and American cities are different. In a study on the effect of the sales tax on development, the Public Policy Institute of California writes:

The survey results provide strong evidence that city governments do favor retail development over other land uses when developing vacant land or pursuing redevelopment.

Essentially, the sales tax made really good sense because you collected the new property tax revenue and more sales tax.  The outcome is that American municipalities encouraged and approved the development of a lot more retail instead of apartments than Canadian cities. So perhaps our municipal tax structures can help explain why generally Canadian cities were more favourable to suburban apartments, and the American cities to more retail.

retail-sq-footage

Source: The International Council of Shopping Centers via ForeXLive

Elevator Suburbs

Photo by Author

Photo by Author

Doug Saunders wrote about the uniquely Canadian phenomena, in North America at least, of having so many people live in suburban apartment buildings:

Forget the U.S.-generated image of suburban lawns versus downtown density: We’re a nation of peri-urban apartment dwellers. Ottawa has more apartment buildings than Dallas, and most are midtown; Edmonton has more than Boston. Toronto’s outskirts are the North American leaders in elevator suburbia: Between Hamilton and Ajax, Ont., there are more than 2,000 of these cement towers, housing more than a million people; one in five residents of Canada’s largest urban area lives in one.

Today’s suburban condo boom is in many ways related to yesterday’s apartment boom. Many of today’s large development companies got their start in the 1960s and 1970s. Canada’s planning culture also continues to play a role in encouraging intensification and denser communities.  I would argue it’s not a coincidence that the region that experienced the continents largest apartment boom in the 1960s and 1970s is experiencing the continents largest condo boom in the 2000s and 2010s.

Why did apartment buildings become so popular in Canadian cities? University of Toronto Professor Paul Hess argues that it was more lucrative to build apartments. Subdivision developers would have to build local streets, public infrastructure and sidewalks according to strict rules and regulation. But suburban apartment developers were not required to install such amenities. Apartment buildings also generated a lot more tax revenue per hectare than single-family homes.

RevenueSeveral years ago I examined the town of Cote Saint-Luc on the island of Montreal and found that apartment buildings brought in four times as much revenue per hectare than single family homes (see chart). Therefore, the suburban apartment became an attractive alternative for speculative builders and municipalities desperately looking to increase their taxes revenues and subsides the amenities and quality of life of the single family homes.

However, this isn’t the entire story. Apartments are just as lucrative in the US as Canada, but the US did not experience the same kind of suburban apartment boom. This is because the structure of the development industry and the planning cultures in Canada was much more favourable to high-rise living. Greg Stuttor writes, the US had more diverse range of companies in the development industry who focused mostly on suburban housing. Meanwhile, Canadian markets, such as Toronto’s, were dominated by half a dozen large companies that built apartment blocks for both the private and public sectors. Canadian developers also operated under a planning regime that was more influenced by the British vision of towers in the park. Graeme Stewart does an excellent job documenting the relationship and influence of British expats on Toronto’s post-war suburban development in his article on The Suburban Tower And Toronto’s First Mass Housing Boom.

The legacy of the first generation of builders and planners remains with us. The Canadian landscape, from Quebec to Winnipeg has been shaped by their ideas and choices. The pattern continues today. Instead of rental apartments Canadian cities have been rapidly building condominiums in the suburbs, guaranteeing that Canadian cities will continue to lead North America in elevator suburbs.

Apartment