Toronto Southcore Financial Centre & Delta Toronto | 159.71m | 45s | GWL | KPMB

[Platform 27]

I'll add that the 400 pound gorillas from the Canadian financial sector that are long-rumoured as potential anchor tenants of a big Toronto office tower are Manulife and Desjardins. (Long-rumoured, I should add, by skyscraper geeks, rather than any commercial real estate experts I'm aware of.)

Manulife, of course, is currently headquartered on Bloor East. Desjardins is mostly Montreal-based, but has been rumoured to be interested in a bigger Toronto presence.

 

[AHK]

CIBC seems not to come up much in the new office space discussion, and I'm a little curious why not.

CIBC has just occupied much of the space at Bell Trinity Square vacated by Bell Canada's move out to Mississauga. Combined with a relatively slower growth rate than some of the other banks, plus its recent acquisitions having been outside of Canada, may have resulted in CIBC not needing much additional Head Office space at this time.

 

[Filip]

I don't understand CIBC's needs either. Their Capital Markets division isn't even in Commerce Court, but in Brookfield Place. Very strange setup and not much growth happening there anyway.

 

[CITY_LOVER]

Thanks for all the info. Out of curiosity, does Bell Canada have any office presence in the downtown core anymore? (I did not know that Bell had moved to Mississauga.)

And since we're talking about office space, remember how there were reports on Toronto's uncompetitive commercial tax rates vs. the 905, etc. and how there were recommendations to bring Toronto's rate down gradually (over 10-15 years) to match the 905 rate (so the 416 wouldn't further lose office space to the 905)? Has Toronto's commercial tax rate actually gone down in the last few years or is it still where it was in say, 2006-2007? Does anyone know? (I really hope Toronto is not going to be in a political gridlock situation regarding this matter...the-much-ado-about-nothing attitude at City Hall is very disturbing.)

 

[taal]

Thanks for all the info. Out of curiosity, does Bell Canada have any office presence in the downtown core anymore? (I did not know that Bell had moved to Mississauga.)

And since we're talking about office space, remember how there were reports on Toronto's uncompetitive commercial tax rates vs. the 905, etc. and how there were recommendations to bring Toronto's rate down gradually (over 10-15 years) to match the 905 rate (so the 416 wouldn't further lose office space to the 905)? Has Toronto's commercial tax rate actually gone down in the last few years or is it still where it was in say, 2006-2007? Does anyone know? (I really hope Toronto is not going to be in a political gridlock situation regarding this matter...the-much-ado-about-nothing attitude at City Hall is very disturbing.)

A large part of the bell move was a call center no ?

Quick answer to your question regarding taxes is 'no', yes the rates are marginally lower today compared, but it would take decades, also keep in mind many 905 communities have imposed near-0 commercial tax rate increases as well, in which the best Toronto can do is stay on par.

Just to be clear, that program was never to lower the commercial tax rate in Toronto, it was to lower the tax differential between residential and commercial i.e. the % each contributes.

There's already a long and darn out conversation about this on this thread so I'd continue the conversation there:
http://urbantoronto.ca/forum/showthread.php/18486-More-%28Or-Less%29-Office-Workers-in-Toronto-s-Core/page2

 

[EnviroTO]

On the other hand, TD is continuing to grow, and my suspicion is that the Mississauga Creekside facility has not been as effective a location as originally envisioned. Subsequent to the four existing Creekside buildings being opened, I am not aware of any further space being added by TD in that area, while there has been additional space absorbed downtown - albeit much of that associated with the TD - Canada Trust merger. As the twentieth anniversary of the Creekside occupancy will be coming up in a few years, I wonder if that might be a candidate for at least partial consolidation back downtown.

At one point Creekside was going to house much more but given a choice most people in the GTA outside Mississauga don't choose to work there due to less adequate transportation and amenities. I don't get the sense that there will be any adjustments to TD's real estate requirements. Any move out of Creekside would cause some staff to leave and Creekside has the lower costs so it would gain nothing. Creekside isn't underutilized, but it isn't growing. There are many floors within TD Centre which house non-TD companies and it seems that TD just picks up space within TD Centre as it comes available to consolidate any offices outside TD Centre but within the core, or to handle growth. Any move out of TD Centre requires a massive amount of space if everyone moves and if everyone doesn't then it makes things worse than status quo.

I see the focus on most projects being consolidation of space within the core, and a trend to locate offices close to union station. Deloitte is pretty spread out and there are few obstacles to it moving into consolidated space so I see this as one of the most likely moves. IBM has two locations downtown and could consolidate but they don't take up enough core office space to name a building. CIBC has locations far apart within the core, but like TD would find little benefit of moving out of Commerce Court. I have to wonder if there isn't development potential for 18 Wellington and 48 Yonge that would allow CIBC to stay in Commerce Court and consolidate at the same time.

 

[yyzer]

just an FYI, the Bell facility in Mississauga is called "Creekbank"....it's a low rise campus of about 3 buildings, and there are several thousand people working there, not just call centre people...they consolidated several offices across the GTA into here..

 

[taal]

just an FYI, the Bell facility in Mississauga is called "Creekbank"....it's a low rise campus of about 3 buildings, and there are several thousand people working there, not just call centre people...they consolidated several offices across the GTA into here..

Oh right, though they just did fire 500 people or so i believe ... but that was on the caller center side alone.

That area of the GTA must have the largest concentration of office parks built in the last 10 years or so. Oh and its bad ... terrible ... Hi-way 7 east (407/404) is glamorous in comparison. The buildings themselves are decent ... if you go for the giant (and I mean that quite literary) shiny and new sprawling campus vibe.

This is the sort of crap that should be banned from the GTA. If there's office development in the 905 it should be concentrated in key locations, where a ton of other amenities exist (i.e. MCC / VCC, downtown Markham).

 

[taal]

At one point Creekside was going to house much more but given a choice most people in the GTA outside Mississauga don't choose to work there due to less adequate transportation and amenities. I don't get the sense that there will be any adjustments to TD's real estate requirements. Any move out of Creekside would cause some staff to leave and Creekside has the lower costs so it would gain nothing. Creekside isn't underutilized, but it isn't growing. There are many floors within TD Centre which house non-TD companies and it seems that TD just picks up space within TD Centre as it comes available to consolidate any offices outside TD Centre but within the core, or to handle growth. Any move out of TD Centre requires a massive amount of space if everyone moves and if everyone doesn't then it makes things worse than status quo.

I see the focus on most projects being consolidation of space within the core, and a trend to locate offices close to union station. Deloitte is pretty spread out and there are few obstacles to it moving into consolidated space so I see this as one of the most likely moves. IBM has two locations downtown and could consolidate but they don't take up enough core office space to name a building. CIBC has locations far apart within the core, but like TD would find little benefit of moving out of Commerce Court. I have to wonder if there isn't development potential for 18 Wellington and 48 Yonge that would allow CIBC to stay in Commerce Court and consolidate at the same time.

I think you hit it on the nail ... the one thing to keep in mind, a driving force behind many of these moves ... environmental awareness and reduced operating expenses; The newly constructed buildings generally have this to offer in comparison to the existing stock.

But here's the problem I think, for Toronto, there just aren't that many large scale employers in the core compared to many American cities (take Chicago for example), sure all the big banks and related companies. But if you were to take a survey of all the companies that have / need 200,000+ I bet it'll be a pretty small list, now of course this is the case throughout Canada. But Toronto could stand out, as the other large employers in the GTA (that the rest of Canada doesn't really have and would fit this previous requirement) are the large US companies with their Canadian headquarters. But the majority of these are located in the 905.

If this wasn't the case, I could see many new towers in the core, moreover there would be much more diversity in terms of the employment.
But as this isn't the case, and office buildings in the core are generally in the 600,000+ range (at a minimum really), implying large lead tenants are required. I just can't see that many new buildings, I don't see the demand. Now smaller buildings in the greater core could take place, and we've seen a couple of them floated around (Queen Richmond Center / King East Center / A couple in the liberty village), but none have stated yet.

 

[CITY_LOVER]

^^^ Completely agree, Taal, and that's the main issue regarding potential future growth of the core. Once most major employers relocate to different buildings (in this office-tower construction cycle), what will be the force behind the construction of towers say five years from now? I'm hoping the financial institutions and related industries (accounting and law firms) continue to grow in the core, but more importantly, we need employers in other industries to be a part of the core (like Telus, Coca Cola, Google, etc.)...now that would be awesome!

Like I've said before, I really dislike the fact that Mississauga has so many offices; it has a very disproportionate number of offices relative to its overall size of the GTA (of course I know why but I'm just sayin' that I still don't like it).

 

[taal]

^^^ Completely agree, Taal, and that's the main issue regarding potential future growth of the core. Once most major employers relocate to different buildings (in this office-tower construction cycle), what will be the force behind the construction of towers say five years from now? I'm hoping the financial institutions and related industries (accounting and law firms) continue to grow in the core, but more importantly, we need employers in other industries to be a part of the core (like Telus, Coca Cola, Google, etc.)...now that would be awesome!

Like I've said before, I really dislike the fact that Mississauga has so many offices; it has a very disproportionate number of offices relative to its overall size of the GTA (of course I know why but I'm just sayin' that I still don't like it).

To be fair its disproportionate for a typical Canadian suburb, not for a city 750K, in which case the amount of employment is quite reasonable and expected.

Unfortunately, all aforementioned companies (Telus / Coke / Google) were all located in the 416 prior to the relocation. So we really haven't seen any migration from the 905 to the 416, it does happen no doubt, but is very limited, and the reverse trend is still strong.

The tax issues won't be fixed, and it seems Toronto is too short sighted to offer the appropriate incentives to attract these other tenants. Really it will take a larger shift from employers themselves, but I don't really see this happening for most of the large companies in the 905.

I think this will always hinder Toronto's core and why it will never be comparable to Chicago, I'm speaking from an employment prescriptive only.

 

[UrbanAffair]

Well, I have to disagree with the "tax issues being fixed". If you are referring to a higher rate or COM taxation in Toronto, it can be done because all the talent is focused in the core of the city, or at least a lot of it. Urban land economic theory shows that companies group in locations together in order to have access to other talent close by, as well as other needed services. For example, the banks need lawyers, accouting firms, and a pool of talented people in similar industries in order to thrive, therefore the city can change a higher rate than say Mississauga for example if they so choose, since a lot of high level talent is located already downtown, and despite the investor driven market, we are getting more and more highly trained and qualified people for many industries including high finance, IT, etc.. And I defiantly do not buy that if the rates are slightly higher, all the talent will just uproot and move out. That costs a lot to relocate entire firms, and unless everyone decides to do it at once, there will still be a huge pool of talent and companies that rely on each other in the core. Its not going to be simply the taxes that keep Toronto's core from being comparable in employment to Chicago's core, it will probably be more like, historical reasons, governmental set up (municipally, and at the state level), the size of the economy in the US, the location to other major markets cores...etc. (For location, I think Toronto is quite ideal actually in its proximity to other large markets.)

 

[CITY_LOVER]

Hey Mckarisma,

Yes, many factors are at play and the talent pool in the core is the strongest (numbers-wise especially), however, imagine if the tax rate was lower - then, we would likely see less of a shift of lower-end and some mid-range office jobs to the 905 that the last ten to twelve years saw. Imagine if we had some of the high-tech offices currently in Markham in King West instead? Or some of the Mississauga American-based companies' HQ in downtown East instead? Imagine if some of the call centre and other jobs of the financial services industry were in office buildings north of Queen upto Bloor St from Jarvis to University Ave instead of Meadowvale office parks?

 

[taal]

Well, I have to disagree with the "tax issues being fixed". If you are referring to a higher rate or COM taxation in Toronto, it can be done because all the talent is focused in the core of the city, or at least a lot of it. Urban land economic theory shows that companies group in locations together in order to have access to other talent close by, as well as other needed services. For example, the banks need lawyers, accouting firms, and a pool of talented people in similar industries in order to thrive, therefore the city can change a higher rate than say Mississauga for example if they so choose, since a lot of high level talent is located already downtown, and despite the investor driven market, we are getting more and more highly trained and qualified people for many industries including high finance, IT, etc.. And I defiantly do not buy that if the rates are slightly higher, all the talent will just uproot and move out. That costs a lot to relocate entire firms, and unless everyone decides to do it at once, there will still be a huge pool of talent and companies that rely on each other in the core. Its not going to be simply the taxes that keep Toronto's core from being comparable in employment to Chicago's core, it will probably be more like, historical reasons, governmental set up (municipally, and at the state level), the size of the economy in the US, the location to other major markets cores...etc. (For location, I think Toronto is quite ideal actually in its proximity to other large markets.)

You're absolutely right that more factors are at play but I think taxes were a fairly predominant one at the early stages. At this point, due to agglomeration, it makes sense big American companies locate in the 905 (airport area), as that is where all the other big American companies are. Similar to your arguments regarding the core.

You seemed to argue that the tax issue can be fixed ? I think your argument was along the lines of it does not matter for the core, due to all the other factors. I think your correct to a certain degree, but again we may have seen much more development (even in the core) over the past 20 years less this issue.

Of course the rest of Toronto looses out here and its hard to see this changing. The only thing that may help, is traffic. Not in the way you think though. This is hysterical if you think about it; But these large 905 employment areas are likely to have way more traffic then the old 416 employment areas, so much so that companies may relocate back to avoid this.


I think Toronto needs to play a more direct role; Take the waterfront, and this happened to a certain degree, attract specific industries and attempt to build the area as a hub for such industry. This happened with media in terms of the corus building, the problem ? Essentially we moved a tenant already located in a 'hub area', liberty village for media. Relocation, there is no growth here.

We need to focus on industries that are not already present, I like to pick large IT companies here, the hard part is the 'hub' areas for such companies already exist in the likes of Markham ...

 

[Platform 27]

Hey Mckarisma,

Yes, many factors are at play and the talent pool in the core is the strongest (numbers-wise especially), however, imagine if the tax rate was lower - then, we would likely see less of a shift of lower-end and some mid-range office jobs to the 905 that the last ten to twelve years saw. Imagine if we had some of the high-tech offices currently in Markham in King West instead? Or some of the Mississauga American-based companies' HQ in downtown East instead? Imagine if some of the call centre and other jobs of the financial services industry were in office buildings north of Queen upto Bloor St from Jarvis to University Ave instead of Meadowvale office parks?

Leaving aside taxation costs--which are somewhat oversold as a major factor shaping where businesses locate--there are a lot of ongoing factors that tilt the balance towards the suburbs for those jobs that don't absolutely need to be in the core. Land is massively cheaper and easier to acquire. Construction costs are way lower to erect a four-story campus in an office park versus pay your share of a 40-storey tower. Major employers are more likely to be able to custom-design and own their facilities rather than be a tenant in a building owned by a pension fund. Timelines to go from planning to municipal approval to construction to opening are a lot faster. The overhead for parking is generally seen as low enough that it can be provided to employees for free, matching or beating any of the transportation-accessibility benefits of the core. Until some of those factors change, we won't see a big reversal.

Indeed, if taxation was all that mattered, then one assumes the residential market would also be responding, and Toronto with its lower residential taxation rates should be growing faster than 905. The latest Census data makes clear that even in the midst of a condo boom 905 residential growth continues to drub 416.