We need big changes in road, transit, tax and housing policies to adapt to new realities
Last week, I was in Edmonton. It is looking more like a doughnut every day. What do I mean by that? Urban cores are declining, with high commercial property vacancy rates, empty stores and fewer people on downtown streets — except for poor homeless souls milling around pedways and light-rail stations. Outside downtown, the suburbs still thrive, with car traffic brisk and malls filled with Christmas shoppers.
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Edmonton is not the only urban doughnut. So are many cities, with downtowns eerily quiet, especially on Mondays and Fridays, as many employees work from home. As of April, Statistics Canada reports, 22 per cent of Canadians were working most of their hours from home. In Ontario, the number is a nation’s — highest 26 per cent. Last spring, Germany’s IFO survey found that Canadian employees were working an average of 1.7 days a week at home, the most in the 34 countries surveyed.
None of this should be a surprise. Video-conferencing enables Canadians to raise their families in cheaper houses with backyards in suburbs and smaller cities, rather than being stuffed into the $1-million, 1000-square foot, two-bedroom condos that these days are all you can get in a large city like Toronto. With fewer people commuting to downtown, it’s also no surprise that commercial real estate is slumping, or that many stores and restaurants that closed during the pandemic remain shuttered. By the end of last year, Canadian public transit ridership was only 70 per cent of pre-pandemic levels, although it has improved somewhat this year.
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Since early 2022, vacancy rates for downtown commercial properties have exceeded those for suburban ones. In the second quarter of this year, they were 18.9 and 17.1 per cent, respectively. Downtown office vacancy rates are especially high in Calgary (31.5 per cent), London (27.7 per cent), Edmonton (24.1 per cent) and Waterloo (21.5 per cent). CBRE reports that although vacancy rates in Toronto and Montreal are already high (at 15.8 and 17.0 per cent, respectively) the outlook is for further softening. Only Vancouver has a relatively low downtown vacancy rate (about 11 per cent) that continues to fall.
Municipalities are hoping the trend toward working at home will reverse itself as time goes by. Although many businesses are trying to get employees back into the office in order to improve productivity and teamwork, workers are pushing back for hybrid arrangements that include some working from home. Many employees find that even when they do come into the office it’s only to spend much of their time video-conferencing with clients and colleagues. Why suffer long commutes in crowded public transport or congested traffic for that?
And then there’s the problem of what artificial intelligence may do to downtown work. AI may not threaten those working in manufacturing or resources — but they don’t typically work downtown. People who do are often involved in the kinds of banking, accounting, legal and back-office operations that AI may well take over, which will mean even harder times for the restaurants and personal service providers who cater to commuters. True, AI may boost employment in other traditionally downtown operations — tech, data analytics, and robotics — and that could make up for some of the loss of other downtown employment. But that gets us back to the question of where employees want to work.
If I am right that urban doughnuts are the way of the future, urban planning needs to change. Right now, roads and public transit typically lead to downtown. But if businesses increasingly locate in suburbs and satellite cities, transport needs will shift from commuting to downtown to driving to schools and suburban centres — a possibility Doug Ford actually talked about in the past Ontario provincial election.
Urban doughnuts no longer will be able to rely on continuously rising commercial property values to fund budgets. Calgary is rebalancing its property taxes between households and businesses after small businesses were hit with eye-popping property tax hikes in recent years. Under the new policy, homeowners face an inflationary increase of 7.8 per cent for 2024 while business taxes rise by only 3.5 per cent. That won’t be popular with residents concerned about inflation and high interest rates. Voters will soon put pressure on municipalities to constrain spending while mayors go cap-in-hand for money to their provincial masters.
Urban doughnuts will also need to confront homelessness with better housing if downtown cores fall further behind. Although some cities are heavily subsidizing the conversion of offices into balcony-less apartments, that doesn’t really address critical family needs for more space. And crime is rampant in many urban centres, as last week’s visit to Edmonton reminded me. If people feel unsafe downtown, only very generous subsidies will persuade them to live there.
So far, I have not heard many municipal politicians concede their cities are turning into doughnuts. But if that is happening, they’re going to need a new approach to municipal priorities. Wishful thinking about the good old days of an urban core living off a commercial property gold mine won’t pay the bills.
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Jack Mintz: Our cities becoming urban 'doughnuts' — empty in the core. Changes are needed
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01.12.2023
We need big changes in road, transit, tax and housing policies to adapt to new realities
Last week, I was in Edmonton. It is looking more like a doughnut every day. What do I mean by that? Urban cores are declining, with high commercial property vacancy rates, empty stores and fewer people on downtown streets — except for poor homeless souls milling around pedways and light-rail stations. Outside downtown, the suburbs still thrive, with car traffic brisk and malls filled with Christmas shoppers.
Subscribe now to read the latest news in your city and across Canada.
Subscribe now to read the latest news in your city and across Canada.
Create an account or sign in to continue with your reading experience.
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Edmonton is not the only urban doughnut. So are many cities, with downtowns eerily quiet, especially on Mondays and Fridays, as many employees work from home. As of April, Statistics Canada reports, 22 per cent of Canadians were working most of their hours from home. In Ontario, the number is a nation’s — highest 26 per cent. Last spring, Germany’s IFO survey found that Canadian employees were working an average of 1.7 days a week at home, the most in the 34 countries surveyed.
None of this should be a surprise. Video-conferencing enables Canadians to raise their families in cheaper houses with backyards in suburbs and smaller cities, rather than being stuffed into the $1-million, 1000-square foot, two-bedroom condos that these days are all you can get in a large city like Toronto. With fewer people commuting to downtown, it’s also no surprise that commercial real estate is........
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