There was a time when no one wanted to end up in Toronto's Liberty Village.

More than a century before the name was coined, the area between King Street West and the Gardiner Expressway (bordered by Dufferin Street to the west and Strachan Avenue to the east) was home to a men's prison and a reformatory for women convicted of crimes like "sexual precociousness" and "incorrigibility." More recently, it was a desolate collection of abandoned factories and empty warehouse buildings - but now, Liberty Village is one of Toronto's most vibrant and fastest growing downtown neighbourhoods.

It's an example of an urban neighbourhood built from scratch - an essential part of modern city building, as tens of thousands of people flood into the downtown core each year. Clearly, Toronto needs somewhere for these people to live, but how do you make sure these newborn neighbourhoods thrive?

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Liberty Village is a sort of test bed for the type of development that creates successful, high-density downtown nodes, said Ken Greenberg, an architect, urban planner and author of Walking Home.

"Liberty Village is kind of the ugly duckling that I like," said Mr. Greenberg. "Designers look down their noses at it because it's clumsy and not very beautiful, but it has all the ingredients of a successful neighbourhood."

In his view, creating a successful neighbourhood from scratch is all about the mix.

Firstly, said Mr. Greenberg, communities require diverse housing options to accommodate singles, couples, families, retirees and low-income students. "The idea is being able to age in place, to go from one stage to another in the same neighbourhood, so you can put down roots," he said.

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Neighbourhoods also need a mix of housing and retail to create the crucial element of "walkability," Mr. Greenberg says. It's a move away from old-school city planning, which tended to separate the different aspects of daily life.

"Where are the grocery stores, the hardware store? Where are the daily life needs that you can walk to?" he said. "Very often the developers that are doing the condominiums don't know anything about retail and don't care, because their objective is to sell the condo units and get out. But they're increasingly learning that there's an opportunity there, and teaming up with experts in retail.

"If you extend that beyond shopping, if you want families to be there, where's the daycare? Where are the playgrounds? Where are the schools? You have to think about it in a different way."

The best new neighbourhoods combine the four pillars of good planning, said Gordon Stratford, design director at the architectural firm HOK Canada and chair of Toronto's Design Review Panel. These pillars are financial (affordable housing), environmental (natural elements, like trees and parks), social (places where people can work, shop and interact) and cultural (a place with a defined culture, either through historical preservation or created by the community itself).

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"Think about the perfect place you want to live in - I can live here, I can work close at hand, I can go to the park, I can get a library book, my kids can go to school here," he said. "People are taking to heart the idea that if I don't have to take hours and hours to commute from where I live to where I work, if I don't have to go so far to get my food, if all these things can be in such close proximity, it can really work."

In his view, the march of technology has created a need for people to be able to live in a neighbourhood that has a small-town feel.

"With the Internet and social networking, you can reach anyone in the world," he said. "I think that as a counterbalance, people really are even more interested in having great neighbourhoods."

Mr. Greenberg said he sees the right kind of mix starting to emerge in places like Toronto's Distillery District, and in other pockets of the downtown core, including the King and Spadina area. He compares that with the CityPlace condo development, growing on old railway lands south of Front Street, between Bathurst Street and the Rogers Centre.

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"It's a monoculture - thousands of tiny units, very little in the way of shopping, very little in the way of anything else," he said. "The development industry tends to identify one product and replicate it over and over again. Right now, it's the very small condominium unit, sold to young first-time purchasers, and nothing else. You're not creating community, but a transient population."

City governments need to ensure that neighbourhoods aren't just filled with condo after condo, said real estate analyst Don Campbell.

"Residential development is fantastic for tax dollars - it's, 'forget about jobs, let's just do residential,'" he said. "I am a free market guy, but there has to be some government control to make sure that neighbourhoods are built with commercial zones. I'm seeing a lot more of that mixed-use - commercial on the bottom, condos on the top."

Mr. Greenberg says this kind of intelligent city development isn't just for the downtown core. He points to the area around Mississauga's Square One shopping centre, where parking lots are being colonized and office use is picking up for the first time in 20 years.

"It was this giant regional mall, but now you have City Hall, a YMCA, a library and Sheridan College moving in," he said. "And what's interesting is that a number of the major land owners, including the owner of Square One, are saying, 'We'e got to start colonizing the parking lots and creating an urban neighbourhood.'"

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Although he sees positive change in terms of neighbourhood building, there's still a long way to go.

"This is the biggest and most interesting challenge facing people who deal with cities today," he said. "It needs to be a partnership between the city, who have to say 'We need this, we want this,' and the private sector, which has to deliver it."