The Recession has Changed the Geography of Growth

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The great recession appears to have had a significant affect on how North America’s major cities are growing. Since 2009, more growth is happening in walkable transit oriented communities than on the edges of metropolitan areas.

Christopher B. Leinberger & Patrick Lynch, from the George Washington University School of Business, have tracked growth in major cities the United States and have found that growth patterns have shifted significantly since the recession. For example,

“Both Metro Miami and Atlanta sprawled faster than most metro areas for decades. In this real-estate cycle, which began in 2009, these two metros indicated a fundamental shift from drivable suburban office development to walkable urban, as their [walkable neighbourhoods] are rapidly increasing their share of the office market.”

The same trends observed by Leinberger and Lynch in the United States can be observed in Toronto. People increasingly want to live in walkable neighbourhoods. The Pembina Institute in a recent survey found that an astounding 81% of people in the Greater Toronto Area would prefer to live in a neighbourhood where they can walk to stores and had frequent and reliable transit service.

This stated preference is playing out in what is happening on the ground. Construction has shifted from the drivable suburban developments to walkable urban development. For example, over the last four years, over 40% of all new units were built in the city of Toronto, a significantly higher percentage than at any time in the last 30 years.

GTA-Toronto Completions

Downtown Toronto has become the fastest growing area in the Greater Toronto Area. Between 2006 and 2011 downtown grew at four times the rate of the rest of the city of Toronto.

In addition to the significant amount of residential development, there is 5.2 million square feet of office space being built in downtown Toronto, which is slightly less then one-third (31%) of all office space currently under construction in all of Canada. This is a significant change from the early 2000s when downtown Toronto was experiencing almost no office growth. CBD Office Space Construction

Five years is not a lot of time. Yet, it is becoming clear that in Toronto, and across North America, the geography of growth has fundamentally shifted. People want to live in neighbourhoods where driving is a choice and where you can take transit or walk to work. These people are now transforming the geography of growth in the Greater Toronto Area, and across North America.

Suburban Corporate Wasteland

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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.

Could the Airport Corporate Centre be Toronto’s Tysons Corner?

Photo by ammiiirrrr

Mississauga Airport Corporate Centre, Photo by ammiiirrrr

One of the reasons so few people outside of downtown walk to work is that they live too far from work to walk. Largely, this is because over the last thirty years a significant number of new offices have been built in isolated former industrial lands where people are forced to drive to work. Strategic Regional Research released a report, A Region in Transition, that explores office growth in sprawling business parks and makes recommendations to break their isolation.

What really jumped out to me from the report was that the Mississauga Airport Corporate Centre, a major regional business park, is the same distance from downtown Toronto as Tysons Corner is from downtown Washington D.C. This invites a great comparison because Tysons Corner is implementing a bold transformation from a sprawling business park, similar to the Airport Corporate Centre, into a mixed-use, walkable community. It’s starting by building sidewalks, breaking up large blocks, connecting to the regional transit system, and even changing its name. Could the Airport Corporate Centre follow Tysons’ lead?

Photo by Strategic Regional Research

Photo by Strategic Regional Research

Strategic Regional Research thinks it should. The report advocates for transforming areas like the Airport Corporate Centre into neighbourhoods to deal with the Greater Toronto Area’s terrible congestion. Because transit access is poor and the area has no amenities or residents, the only way to get around, even for a bite to eat, is to drive. As a result, 55,000 people drive into and out of the Centre every day. As Glenn Miller, a contributor to the report, argues:

Most new transit proposals, including the downtown relief line, will do nothing to connect suburban workplaces to where workers live. Nor will they ease the congestion that’s now strangling areas outside the core, said Miller.

By looking at the Airport Corporate Centre as a neighbourhood which is part of the city, instead of an isolated employment ghetto, Mississauga can cut gridlock, dependence on cars, build new places to live, and encourage walkability.

Is this vision possible? Could thousands of people be able to choose to live and work in the Airport Corporate Centre? The challenges are significant. A recent City of Vaughan Study (focused on building a more urban Vaughan Centre) concluded,

Despite the prestige associated with the employment area, it would be extremely difficult and cost prohibitive to transform the Airport Corporate Centre into a more walkable, compact urban place due to the existence of large surface parking lots and industrial buildings.

It may be extremely difficult, but it is not impossible. Investment in transit is crucial, and Mississauga is already taking the first step. The City is preparing to open a new Bus Rapid Transit line which will pass through the Airport Corporate Centre by the end of 2015. As a result, new types of development are being proposed.

The most ambitious new development is Spectrum Square, which aims to be “Mississauga’s Premier Sustainable Corporate Community.” As a sustainable community, it is selling transit and walkability. The renderings clearly portray an urban setting, while the promotional material states:

Spectrum Square, Mississauga

At Spectrum Square, there will be inviting places to gather both inside and outside. You can take a break and enjoy the outdoor amenities in the central square, or discuss the latest project with fellow colleagues over espresso. The Mississauga BRT and the Spectrum Square shuttle will provide door to door connections to the Mississauga and TTC transit systems. Spectrum Square will also be a venue for special events and outdoor festivals.

Clearly, office developers are following Tysons’ lead and seeing the advantage of promoting a more walkable, active and transit oriented workplace. Now its Mississauga’s turn. The City should follow Tysons’ lead by providing a new name for the Airport Corporate Centre (I suggest Elmbank), better streets, and places to live.