The Economics of City Building

Mid-rise building at 2 Alexandra Blvd in Toronto. Image from the City of Toronto website.

There was a piece in the Globe and Mail about why a corporation would pay a premium for an office downtown when cheaper places are available elsewhere. I won't regurgitate Tara Perkin's article, but I will say that it speaks to the difficulties of matching where you live to where you work. Glenn Miller -VP of Education of the Canadian Urban Institute - once told one of our classes (if I might paraphrase) that one of the biggest challenges was not with urban -> suburban travel (e.g. Toronto to Mississauga) but rather, suburban -> suburban travel (e.g. Mississauga to Markham).

But before we pat ourselves on the back for initiatives such as the Greenbelt Act, Places to Grow, sustainable living (and etc.) for driving this movement back to Toronto, I think it's important to recognize that the live/work/play lifestyle that eschews the car for citizens of Toronto (and of other larger cities, such as Montreal and Vancouver) can't happen from legislation alone. Economics was, and continues to be, one of the most important factors in driving change in our cities.

Companies are increasingly following LEED guidelines when constructing new buildings. There are savings involved by making a building more energy efficient, but LEED also gives you bragging rights that can attract talent. Saving the planet might rank a distant third. And certainly, some (not all, but some) of the demand for living downtown is being driven not only because it reduces the home/work commute. But were also seeing people choosing to live downtown because of factors such as the rising cost of oil which can make mundane tasks, such as grocery shopping, quite expensive.

But let's consider how economics can have a larger effect on city-building. The City of Toronto has designated several major roads as "Avenues". The intent (coupled with their Avenues and Mid-Rise Building Guidelines) is to entice developers to create new 5 to 10 storey buildings along these major arterial roads, such as the Danforth, Queen, and College by creating new "as-of-right" zoning. Despite its introduction, there has been relatively little up-take from the development community.

Two of my former classmates (and planners extraordinaire) Robyn Brown and Arlene Beaumont did their masters research papers on this topic, and found that one of the barriers to mid-rise development had to do with something completely out of the City of Toronto's control: the Ontario Building Code. Buildings above four stories have to be reinforced with steel, rather than just wood. This dramatically increases the cost of construction, making it hard for a developer to justify building mid-rise.

Understanding these links is an often over-looked part in planning. This is not to say that "all efforts are in vain against the mighty hammer of capitalism", but rather, we need to seek ways to get the private sector on board when trying to create healthy, liveable cities. Let's just be sure we use them for something they're good at doing, instead of something they're not.