Is CityPlace Toronto’s next ghetto?

[taal]

A lot of the head office jobs will remain downtown for that reason, but a lot of the back office stuff will continue to leave downtown I'm sure

I actually don't think this is the case ... we haven't seen this yet, sure it's happened to a certain degree but not by far and large.

A lot of business companies have their IT (not necessarily infrastructure) but staff downtown. I mean what exactly is a 'head office job' anyway, it's probably very limited. That's not the trend, particularly lately where more and more people want to live downtown.

Anyway the point is, when a company does want to leave, it's the 905, not the 416. Maybe it's for the reason you state above i.e. the wealth of the residents in the business districts; Which out of the core and on Yonge in Toronto is probably fairly low.


So what sort of job should Toronto be trying to attract to the waterfront developments ? Saying communication / media is really saying lets steel them from King West. Ideally new jobs can be created (or taken from the surronding regions).

Great example, target, they came to Canada, where did they set up their headquarters ? Airport area.

 

[nfitz]

A lot of the head office jobs will remain downtown for that reason, but a lot of the back office stuff will continue to leave downtown I'm sure

That was the 1980s and 1990s.

Aren't we seeing some of the opposite trend recently? Head offices in 905 or outer 416 moving downtown (such as Coca Cola), and back-office stuff as well (isn't Royal Bank moving a pile of back office stuff from 905 into their new building on Queens Quay)?

With traffic in 905 getting even worse, a 905 location does limit staffing in such a way that a downtown location doesn't, as it's quite accessible to anyone in the GTA on transit.

 

[taal]

I don't think we've seen many revocations from the 905 into the 416, there have been a couple cases, you mentioned a few. But by far and large it doesn't happen.

I think there's been a lot less of the opposite taking place the last 5 year or so, moreover a lot of business downtown have been growing a lot.


I think big American companies are the key, that's what populates the majority of office parks in the 905 ; Particularly the airport area. That's why that area was heavily impacted during the recession, more so then downtown.


For whatever reason, they all love to locate there, it's a huge list too, Mississauga in particular houses many many Canadian HQ operations.

 

[AKS]

That was the 1980s and 1990s.

Aren't we seeing some of the opposite trend recently? Head offices in 905 or outer 416 moving downtown (such as Coca Cola), and back-office stuff as well (isn't Royal Bank moving a pile of back office stuff from 905 into their new building on Queens Quay)?

With traffic in 905 getting even worse, a 905 location does limit staffing in such a way that a downtown location doesn't, as it's quite accessible to anyone in the GTA on transit.

Someone mentioned in the Oxford thread that RBC was just amalgamating their staff from different buildings in downtown into one building. So not really moving from 905 to 416. However someone here mentioned earlier that one of the banks was moving some of their staff to 905.

 

[nfitz]

Question is, are we seeing the start of a trend, or just a few odd cases.

 

[Thanos]

Actually RBC is bringing some 905 staff to downtown. And yes there is another bank that is doing the opposite.
But at the end of the day we're talking about small numbers.
The banks cannot afford to not be in downtown. Which is why downtown Calgary is more frightening than the 905.

 

[Jonny5]

I wonder what's going to happen to the smaller aging 1950s and 60s buildings that are getting way behind the A grade buildings. For example, the office buildings around Dundas and University, and the off the path ones downtown, like on Adelaide, west of York. How do these buildings do at attracting tenants? Could they go the way of the Imperial Oil building on St. Clair and become condos?

 

[taal]

Actually RBC is bringing some 905 staff to downtown. And yes there is another bank that is doing the opposite.
But at the end of the day we're talking about small numbers.
The banks cannot afford to not be in downtown. Which is why downtown Calgary is more frightening than the 905.

Do you have specifics, in terms of which banks are doing which moves ?

 

[taal]

I wonder what's going to happen to the smaller aging 1950s and 60s buildings that are getting way behind the A grade buildings. For example, the office buildings around Dundas and University, and the off the path ones downtown, like on Adelaide, west of York. How do these buildings do at attracting tenants? Could they go the way of the Imperial Oil building on St. Clair and become condos?

meh, not really; There are many such buildings but they all tend to be small, not all companies out there are the large 5 banks There are many other smaller firms that need to locate beside the larger insituations but in cheeper class C/B office space.

During the recssion (i.e. now), they notes that while overall vacany rates in Toronto (downtown in particualr) are dropping there has been a lot of 'flight to quality', which basically means, as rents a little cheaper, moving from say a class B to a new office tower.

But when the market picks up and there is little new development, the older class C and B spaces get attractive again.


Regarding the suburbs I read a nice quote in one of the CRBE reports, it basically said the net retnal rates (i.e. what landlords) take in, do not justify new development, this was in regards to the central east market (a retetivally new one that defines most things in the north east 416 i.e. consummers / Eglinton Don Mills / ...). Though it's interesting to note they forcast increase activity as some companies want to move out of the conggestion further north in the 404 (i.e. Markham ...).

 

[canarob]

Well in 2012 one of the big banks will be closing a downtown floor of about 100 employees and moving them to Mississauga.
Now some might say these jobs are back office jobs but the majority of financial industry jobs are back office jobs and they are well paying jobs with great benefits.
I don't see any of them going to Markham or other non-Mississauga suburbs. The point i'm trying to make is those non-Mississauga 905 areas are having a hard time to attract businesses. Those that will set up are, like Taal said earlier, warehousing and ditribution which need a lot of land. However, these types of businesses are not what downtown Markham and Vaughan and Pickerings' business park are trying to attract.

I can also see a bank moving to downtown Calgary before they move a big portion to the 905 region.

Why do you think Missisauga is "hot"? The west has the highest vacancies in the GTA (10.0%). The north has the lowest (3.7%). As taal mentioned, the technology industry is mostly based in York Region and demand for office space is high.

http://www.cushwake.com/cwmbs3q11/PDF/off_toronto_3q11.pdf

Aside from having more existing space, I have no idea why you think Mississauga is some sort of alpha suburb. This might be true with respect to the big banks, but how is the northern GTA somehow inferior to the west, aside from proximity to the airport?

 

[taal]

Don't read into those vacancy numbers ...

The GTA west is and has been the hottest market effectively. The numbers don't reflect that because a ton of new inventory has been built over the last 5/10 years. So the vacancies are higher.

GTA north sees very little in new inventory in comparison and is a much smaller market, in terms of the sheer amount of space available.


There's one more thing, depending on what report you look at, GTA west includes the Toronto portion around the airport and down south on the 427 ... that specific area has some of the highest vacancy rates in the GTA, around 15/20% ... that pulls the wests numbers up. Why ? Can't say, likely tax issues indirectly, and directly the fact that most of the buildings are old compared to new inventory in the west.



Now the GTA North a.k.a Markham / Richmond Hill is hot as well ! If they build as much space as they tout in the next 20 years the NORTH 416 will likely see a lot of tenants relocate and maybe even the core. There's not that much demand in the GTA relatively speaking so they'd be relying on relocates + expansions.

 

[k10ery]

There's one more thing, depending on what report you look at, GTA west includes the Toronto portion around the airport and down south on the 427 ... that specific area has some of the highest vacancy rates in the GTA, around 15/20% ... that pulls the wests numbers up. Why ? Can't say, likely tax issues indirectly, and directly the fact that most of the buildings are old compared to new inventory in the west.

taal, I think you are saying over the last few posts that the downtown market is healthy, but the outer 416 market is in the tank because of the tax differences.

If so, is that anything to worry about? The outer 416 industrials can switch over to residential, just like I am seeing along the 427. That's a lower tax rate, but property value increases should more than make up the lost revenue to the City.

I would think Toronto should not be cutting its commercial/office tax rates anymore. That might keep a few jobs in the outer 416, but there would be a big revenue loss downtown, and who wants that?

What do you think? Toronto has cut its business taxes majorly since 2001. Did the City lose a lot of revenue because of that? Does that explain a big part of the current budget problems? Or was it a necessary change to stop the outflow of jobs to the 905?

 

[taal]

Toronto has never cut it's business tax rate ...

A while back the province changed the rates at which cities are aloud to increase commercial rates; essentially 3:1. i.e. every 3% increase to the residential rate can only increase commercial rates by 1%.


I'm not sure why you think it's okay, for a city of roughly 3 million, to essentially have very little employment outside the core.


What bothers me is, when a company decides to leave the core, as the gross rental rates are more expensive (this should be the case regardless of the tax differential) never is the outer 416 considered, it's always the 905. The reason being for everything we discussed above.


Honestly it doesn't make sense to have the same commercial tax rate applied throughout the city. Or if it does, the commercial rate must be more comparable with the 905.

 

[freshcutgrass]

Not only is Cityplace not going to become a "ghetto" (for fairly obvious reasons)...by the time you think this will happen, what we now consider ghettos (St Jamestown, Regent Park) will have been gentrified out of ghettoism as well. Gentrification of the entire downtown core area will eventually be complete. Unless something really horrible happens to the city, gentrification will continue.

 

[taal]

Not only is Cityplace not going to become a "ghetto" (for fairly obvious reasons)...by the time you think this will happen, what we now consider ghettos (St Jamestown, Regent Park) will have been gentrified out of ghettoism as well. Gentrification of the entire downtown core area will eventually be complete. Unless something really horrible happens to the city, gentrification will continue.

meh, I think the core will always be home to some of the low/medium income neighborhoods, it just makes sense currently as most of the social services are located in the core. Though there are some great efforts to mix everything together a.k.a the new regent park I think in some areas it'll still be difficult. Not that there's anything wrong with this.


The whole city-place argument is silly anyway, I'll just leave that alone. A better question would be, will cityplace be a good neighborhood by Toronto standards going forward. Seeing some of the plans for more retail / public use areas around the park, I think it may turn out alright in the end.