More (Or Less) Office Workers in Toronto's Core?

[JasonParis]

Thanks Glen. The arguement was based around workers in the core over the last few years basically.

Do we have any idea if suburban office growth (905 in particular) has slowed-down in recent years (as it has seemingly sped-up a bit in the core)?

 

[Dan416]

Thanks Glen. The arguement was based around workers in the core over the last few years basically.

Do we have any idea if suburban office growth (905 in particular) has slowed-down in recent years (as it has seemingly sped-up a bit in the core)?

I don't have any numbers to back it up, but I think it's obvious to anyone with eyes that office growth in MCC (and possibly SCC and ECC) has slowed down to 0, whereas it continues to grow in the ACC and Meadowvale. So it's a mixed bag in my view.

 

[GraphicMatt]

Some relevant charts from the 2012 Economic Dashboard, just released this week.
http://www.toronto.ca/legdocs/mmis/2012/ed/bgrd/backgroundfile-45047.pdf (PDF)

Office Vacancies - 416 vs 905

ICI Permits - 416 vs 905

Lots of other good data in that PDF as well.

 

[taal]

Even when the 905 was booming (it still is) very little of that was in MCC. It's all the land around the airport and further east on the 905.

There's definitely been growth in the core over the last 3 years or so but you could argue there should be much more. Again, on top of this, shouldn't the outer 416 factor in ?


Also, office vacancy is very subjective ! Even when there was no development in the core Toronto's office vacancy #s were lower then the 905!
The 905 vacancy rates tend to be higher (in the past at least) because they have so much new development ! It takes time to fit.

So if our vacancy rate is lower while theirs is higher keep in mind their adding tons of new space every year to fill up while we're not.

 

[Long Island Mike]

From the City of Toronto 2010 Employment Survey, p. 6:

In 2010, there were approximately 511,300 jobs in Toronto’s Downtown and Centres (see Figure 10) or 39.4% of all jobs. After the decline in employment in 2009, the Downtown and Centres employment has rebounded by 16,600 jobs or 3.4% in 2010 (see Table 3).
Employment in Downtown and the Centres in 2010 is now 11.9% greater than it was five years ago, an increase of 54,200 jobs. Downtown accounts for most of this growth at 84.6%. North York Centre grew by 9,700 jobs since 2005, however, Etobicoke Centre lost 1,400 jobs or 13.2% during the same period (see Figure 11 & 12).

http://www.toronto.ca/demographics/pdf/survey2010.pdf

Caveat: employment figures isn't necessarily for office workers only.

A-D: This is very interesting information concerning Toronto's CBD as well as its other central employment areas...
I always wondered about this subject and how Toronto compares to other large North America employment centers
like Manhattan (NYC); Chicago and Montreal for starters here...Thanks for the link...LI MIKE

 

[k10ery]

Some relevant charts from the 2012 Economic Dashboard, just released this week.
http://www.toronto.ca/legdocs/mmis/2012/ed/bgrd/backgroundfile-45047.pdf (PDF)

Lots of other good data in that PDF as well.

Very cool, thanks.
It would be nice if they explained in their what they think causes the trends for Toronto. In one chart, they imply the downturn after 1989 was caused by the FTA and the GST ... with the recovery caused by free trade with Mexico. I'm not sure that's the right story , lol

 

[TrickyRicky]

The trend lines in those statistics tend to mirror my own hunch that the previous recession was harder on the 905 than Toronto itself. I have a feeling that some established previous assumptions about business trends espoused by many are about 5 years out of date. To make myself clear however, I do not wish for these trends. While I am financially invested in the continuing success of the city core, I have no doubt that the general health of the city region and it's future has more to do with what is going on in the 905.

 

[TOareaFan]

The trend lines in those statistics tend to mirror my own hunch that the previous recession was harder on the 905 than Toronto itself. I have a feeling that some established previous assumptions about business trends espoused by many are about 5 years out of date. To make myself clear however, I do not wish for these trends. While I am financially invested in the continuing success of the city core, I have no doubt that the general health of the city region and it's future has more to do with what is going on in the 905.

I think if you went to commercial real estate guys in most major markets and said "I have a market where the office vacancy rate in the core is 5.5% and the suburban office vacancy rate is 9.5%...which one is healthy? which one do you want to build/invest in?"....you would get a resounding answer of "Why do I have to pick one...why can't I do both?"

Those are very healthy vacancy rates that, in most US markets as an example, would lead to speculative building.

 

[taal]

Not sure ... if you go back 5/10 years, the core still had a lower vacancy rate yet very little new construction. While the existing stock was relatively well occupied there was no demand for more space.

In the 905, there's always demand, again, typically by large American companies, and speculative construction does tend to take place in the 905.


You cannot compare Canada to US markets on a whole ... the average vacancy rate is likely 15-20%. The majority of big US cities are in the 15%+ range. You just don't see that here for whatever reason, even in the most depressed markets.


But I do agree with your general sentiment, but, sorry to beat a dead horse, but the rest of the 416 is included in the 'GTA' right ? Because the vacancy rates are quite high, in Scarborough / North York (not Yonge) / Etobicko, and no construction for the last long while. These markets are unhealthy and constantly losing jobs.

 

[Glen]

While GraphicMatt's graphs might give the picuture of a healthy market in the city they ignore how mcu office space was constructed. Vacancy rates only tell par of the story. If anyone is really interested they should read the following .......

http://torontoofficecoalition.com/pdf/Business_Competiveness_Jan2011.pdf

also this city report ..... https://docs.google.com/viewer?a=v&...W9CB81&sig=AHIEtbTLaESqetAQC-2flzpqAit2Us9j2g

 

[taal]

While GraphicMatt's graphs might give the picuture of a healthy market in the city they ignore how mcu office space was constructed. Vacancy rates only tell par of the story. If anyone is really interested they should read the following .......

http://torontoofficecoalition.com/pdf/Business_Competiveness_Jan2011.pdf

also this city report ..... https://docs.google.com/viewer?a=v&...W9CB81&sig=AHIEtbTLaESqetAQC-2flzpqAit2Us9j2g

Interesting read, but there's really nothing new being reported.

If anything, the big take away is that while taxes are still an issue, they matter less to employers today compared to say 10 years ago i.e. other factors are taking precedence. This will work in Toronto's favor, I should reword that, it will work in the core's favor (not the rest of Toronto).

There are references to transit in Chicago in the article that I can't get my head around, apparently we should emulate their transit system as all employment regions are well connected by high order transit. Knowing Chicago, and many people who live there, this can't be further then the truth, there are plenty of areas in Chicago where transit is nonexistent yet there is heavy commercial use.
To me where Chicago shines is the reliance of its core, which is much larger then Toronto (from a purely commercial office space point of view), also their core is more diversified.

Anyway, the other take away is the commercial tax difference is not going anywhere soon. So other things need to be done make the rest of Toronto competitive.

 

[Glen]

Interesting read, but there's really nothing new being reported.

If anything, the big take away is that while taxes are still an issue, they matter less to employers today compared to say 10 years ago i.e. other factors are taking precedence. This will work in Toronto's favor, I should reword that, it will work in the core's favor (not the rest of Toronto).

Taxes matter little to employers they matter a great deal to landlords / developers. High taxes will be capitalized into rents and land values so the incidence rarley falls on employers.

The CanUrb report argues that taxes are the issue.

 

[taal]

Taxes matter little to employers they matter a great deal to landlords / developers. High taxes will be capitalized into rents and land values so the incidence rarley falls on employers.

The CanUrb report argues that taxes are the issue.

In the sense that gross rents need to be competitive, so the landlord will eat whatever extra cost associated with the operating expenses, namely taxes ?

Right, that makes sense. Having said that, if a landlord can get away chagrining higher net rental rates, they can compensate for the tax differential. And employers do care about the gross rental rates (i.e. what they pay overall). I can see in the future, more employers will be willing to pay higher gross rental rates to be in the core.

But this will only help the core, and not the rest of Toronto. Even with this, only so many employers will be willing to pay more, so it's sad imagining how much more office construction there could be (even downtown) !