Downtown Toronto’s economic recovery will be fragmented

Business recovery in Canada’s largest city will be a piecemeal process, according to research from the Toronto Region Board of Trade’s Economic Blueprint Institute, especially for sectors of the economy that rely on office workers in the city’s core, many of whom will continue working remotely.

“What we are about to experience is not a single recovery. It is going to be a series of recoveries. And each requires a different plan to lift up businesses, its workers, and acknowledge the very different challenges that each has faced,” said Jan De Silva, president and CEO of the Toronto Region Board of Trade. “For a swift recovery, the region needs to look past municipal boundaries and engage in place-based recovery planning and regional investments in express rail, high speed broadband, skills development programs, land-use planning, and affordable workforce housing.”

At 67%, the downtown core has Toronto’s highest proportion of remote workers, and the confluence of their absence with the downturn in leisure and business tourism has crippled the area economically, says the board. Conversely, the area around Toronto Pearson International Airport has the lowest proportion of remote workers at 38%.

Downtown Toronto’s office vacancy rate rose to 7.2% in Q4-2020 from just 2% prior to the COVID-19 pandemic, although the dearth of demand for office space is more acute in the city’s suburbs, doubling, and in some cases tripling, the downtown vacancy rate.

The Toronto Region Board of Trade noted that the pandemic didn’t trigger mass bankruptcies, for which it credits government support and rapid strategic overhaul towards e-commerce, but small businesses throughout Ontario still accrued an additional $66.7 billion in pandemic-induced debt, averaging nearly $208,000 per business.

“Understanding how we survived—and in some cases thrived—during the pandemic is key to understanding how we will recover,” said De Silva. “We’ve discovered that there is no one-size-fits-all solution to recovery.”

For the Downtown Yonge Business Improvement Area, Step One of Ontario’s reopening plan, which took effect June 11, couldn’t come soon enough. The BIA oversees the area encompassing Yonge-Dundas Square, which is Canada’s busiest intersection, and according to the BIA’s COO and executive director, the entirety of Yonge St. normally sees 42 million pedestrians a year—a number that jumps to 50 million at the Eaton Centre located across the street from the square—but that number has fallen significantly.

“At one point during the pandemic, traffic was down 85%, but we’ve sort of settled around at a 40% reduction. If you normally have a million people around the Yonge and Dundas intersection in one month, we’re down to 600,000 people,” said Mark Garner.

Although bars and restaurants reopened their patios on June 11, the BIA still anticipates a major shortfall stemming from work from home arrangements and the continued closures of concert venues, like Massey Hall on the corner of Victoria and Shuter Sts.

“We work with the SRRA [San Romanoway Revitalization Association] to produce occupancy reports for employment clusters, which normally run around 80% occupancy because people travel for work, are off on vacation or work from home, but it’s currently at 4% for Toronto. If you think employment clusters are coming back to pre-COVID numbers, well, the economics won’t return to downtown and what that impacts is fewer people using Metrolinx and the TTC,” said Garner.

“The economics these people create by having lunch or shopping won’t return any time soon. It will be staggered and that’s why we’re out there right now advocating for subsidies.”

Ryerson University alone helps generate $32 million in secondary economic activity in the area, but if its students don’t return in autumn, Garner anticipates harder times ahead for fast food restaurants, cafes and other businesses.

“We’re expecting the best the economic cluster will be post-COVID is 60%. We’re expecting another bump in September with more people coming back, which would bring it to 10%, and hopefully by December it gets to 20-30%. It will take another year, or longer, to get back to pre-COVID economics, for sure. We’ll probably see ongoing loss of business, to some degree.”

The BIA will soon release its latest vacancy figures, but Garner noted that Pickle Barrel, Tangerine Bank, Swiss Chalet, Reds Wine Tavern, Scaddabush, Dukes, and even a Tim Hortons, are among the permanent closures in the area. But that hasn’t precluded other businesses from moving in. Before the pandemic, the BIA’s vacancy rate was 12-15%, says Garner, and he estimates it’s risen to 15-18% (although he reminded that the latest vacancy statistics have not yet been released.)

“We gained an Ikea, so there’s been that sort of ebb and flow, that flux,” he said. “(Yonge St.) has changed for sure. We lost the Air Jordan store but at least Footlocker moved into their location. Twenty-one days from now, there will be further laxing of restrictions, so we’ll be in a better place.

2021-06-14 13:46:23

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