Are condos squeezing out office use in downtown Toronto?

Former commercial brokerage executive Iain Dobson sees a lot wrong with Toronto’s downtown.

Commercial development has been squeezed out of the city core – which is well served by public transit – and forced into the surrounding suburbs, creating traffic congestion and inefficiency.

“This is a crisis for everyone in the community,” said Dobson, who co-authored a report for the Canadian Urban Institute that warns that development-ready land for office space is fast disappearing and that employees continue to leave the core for locations in the surrounding 905 region.

“It is the lack of affordable, reasonably deliverable office space alternatives for tenants in the 416 (area code) and as a result the employment base is eroding,” he said.

Dobson cites statistics from the City of Toronto which show that 54% of people whose jobs are in the 416, work in an office building. “The Conference Board argues that that is probably two-thirds of the wealth generation in the city of Toronto. That (office space in 416) is growing at a snail’s pace compared to the industry as a whole.”

The trend is undermining the “livable, workable” city that Toronto believes it is achieving with the profusion of condo towers sprouting up in the downtown core.

“If you believe in being able to live where you work and not sitting in your car for two-and-a-half hours a day, we need to be able to meet the needs of employers, listen to them, find out what it is that drives them and fix it, because it isn’t working.”

Dobson’s study has found that over the past decade, for every square foot of commercial space built in downtown Toronto, seven square feet of space has been built outside the city.

What is driving the sprawl, Dobson said, is the five to seven-year delay that major tenants are unwilling to put up with to secure a 200,000 sq. ft. space in a newly built Toronto location. “It takes so long to do, never mind the price of the land, never mind the taxes, it takes so long to do it that tenants are not even looking there (in 416).” The result is people are increasingly working in corporate centres along major highways surrounding the city.

“You get people working in communities that have nothing but workplace,” he said. “So there is no place to have coffee with a friend and there is no place to buy a dress or a suit. Everything you do there you have to drive to and you have to drive back from. That is why we have congestion.”

Since 1980, more office space has been built in the 905 region around Toronto than exists in Vancouver, Dobson said.

Two of the biggest development projects currently underway in the city, the Trump Tower (70 storeys) and the Shangri-La Hotel (65 storeys) are hotel and condo developments rising up on land which was once set aside for office development. In total, there are currently a dozen highrise condos under construction in the downtown core, a development which he joked is turning the 416 area into the bedroom community for the 905.

Dobson’s report for the Urban Institute, titled “The New Geography of Office Location and the Consequences of Business as Usual in the GTA,” is meant to spark a discussion.

“What we are trying to do in that report and what we are trying to do generally is not make a political issue out of this which is why we were very slow to bring it out into the public eye.”

He said that the development community is slowly coming around to his view that commercial sprawl is not to the city’s benefit. “The brokers are having a hard time with this,” he said. “This isn’t about whether we can get another Bay-Adelaide built. This is about employment in the 416 that has no market.”

Dobson said the Canadian Urban Institute has been doing research on solutions to the problem but that few in industry or politics are ready to hear them. “Everybody is interested in employment and everyone loves this great city. The problem is and no one really has their eye focused on the problem, that we are not business friendly. We have been bank friendly only to the extent that we have allowed those buildings to be built. But we haven’t been friendly when it comes to taxes or anything else. We are just lucky that we have strong banks.

“Can you imagine what would have happened if the city of Toronto had lost the same amount of financial services jobs that Manhattan did. We don’t have the publishing industry, we don’t have the fashion industry, we don’t have a whole lot of other businesses like Manhattan does to sustain the community,” he said. “If the financial services sector took a hit in the 416 the city of Toronto would be in huge trouble.”

Paul is a writer, editor and media trainer based in Toronto with over 25 years of experience as a business reporter. He has written for Canada’s major news services on…

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Paul is a writer, editor and media trainer based in Toronto with over 25 years of experience as a business reporter. He has written for Canada’s major news services on…

Read more

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