Toronto is changing fast. No longer is it just Canada’s financial and business hub, but it’s becoming a world centre as well, with many of the spin off benefits and challenges.
This is the argument or observation of Dr. Sherry Cooper, the Chief Economist at BMO Capital Markets and BMO Nesbitt Burns in an essay she penned last week.
In my view, Toronto is becoming a world-class financial and commercial centre on the order of New York and London. While [new ultra-deluxe] condos are going for $1,300-to-$1,800 a square foot, they are cheap by international standards. Donald Trump—at the Toronto ground breaking of Trump Tower Toronto’s construction at Adelaide and Bay—recently declared that comparable property would sell for $5,000 a square foot in New York and even more in London.
No where is the new wave of foreign money more evident than on Bloor Street—Toronto’s version of the Big Apple’s Fifth Avenue with its mixed-use high-end residential, office and retail space. New designer stores are opening and existing ones are expanding. Canada’s-own Holt Renfrew’s flagship store has expanded and remodeled, becoming even more decidedly upscale; as well, designer boutiques such as Chanel, Gucci, and Escada have expanded. High-priced trendy restaurants are popping up city wide and the remodeling and expansion of the ROM, the Gardiner Museum and the Art Gallery of Ontario are enhancing this urban renewal. We are observing the gentrification of Bloor Street west of Avenue Road and east of Yonge Street as downscale commercial properties are replaced by upscale residences and boutiques. For example, the 16-storey ultra-luxury Museum House condominium development will take the place of the Pizza Hut opposite the ROM’s new Crystal and it will be accompanied by other luxury condos on that same strip of Bloor. Even the seamier side of Yonge St. south of Bloor will change with the coming (in 2011) 80-storey hotel/residential/retail tower of 1 Bloor, touted as the tallest residential tower in Canada by its Kazakhstan-based developer. This five-star boutique hotel will join the other five larger five-star hotels opening in Toronto in the next few years, taking us from not a single five-star hotel in all of Canada to six and counting in Toronto alone.
Bottom Line: this is a fascinating and important economic development, bearing with it enormous portent. On the positive side, it will be a boost to the revenue base of the beleaguered city government and certainly increase the economic growth of the city and no doubt encourage the rise of the Canadian dollar. On the negative side, it will reduce the affordability of the city for current residents, potentially displacing low-income residents. It puts additional strain on public services and adds to the de-industrialization of the inner city. Historical preservation has become an issue as we have seen with the saving of the old fire house and the frontage of the first site of Mt. Sinai hospital on Yorkville Avenue. We run the risk of creating concrete caverns that block the sun and increase gridlock on already-busy city streets. It is an opportunity and a challenge, and it is happening faster than most people realize.
Toronto is certainly changing. While I generally agree with Cooper, I think she may be over-stating the case for current change — although not Toronto’s potential. I’m not sure it is achieving the status of New York or London — at least not yet. But it may be securing a role as the number two financial centre in North America after New York. And Toronto has a lot of advantages in terms of growing in this area:
In particular, Toronto offers an attractiveness to potential foreign immigrants and an easier immigration process, in comparison to New York. With over 40% of the population foreign born in the Toronto area (know locally as the GTA), most immigrants can find an ex-pat community from their birth country, should this be important. And Canada has been easing immigration restrictions, particularly for young, educated professionals — talent — which is becoming scarce in some industries and cities.
Toronto as a city is more like New York and London than most North American places. Although automobile-centred sprawl has created some challenges in recent decades, the older districts in the core are more human centred and walkable — and well serviced by efficient public transportation options used by all levels of society (much like New York and London). As oil becomes expensive and more sustainable living desirable, Toronto like New York and London is better positioned.
Certainly, Toronto lacks the same history as a global hub that London and New York share. But has Dubai has shown, this can be overcome with ingenuity, determination, and boldness. Further growth in Toronto may, therefore, require some clever and brash steps from business and political leaders.
And, Cooper is correct in noting the challenges. One she doesn’t mention is that Toronto’s infrastructure is decaying. Roads, overpasses, sewers, etc. require upgrades. Moreover, the city is desperately short of funds and cutting back services to citizens. I’m not sure that new deluxe condos will bring in enough new revenue to really help.
Without good infrastructure, the city will start to decline under its own weight and become less livable, undermining its potential as a financial centre. It’s the federal government’s revenues that will really benefit from Toronto becoming a bolder, global city and financial hub. And its from Ottawa that more support will be needed in order for Toronto to continue on this path.