“If you build it, they will come.” Those may be inspirational words, but for commercial developers in Canada who hope to build near transit lines, they can be frustrating.
Build what? When? Where? Across Canada, developers are confronted with a dilemma – it can be lucrative and good city planning to construct commercial projects that have access to new transit, but transit takes years of planning and many cities have trouble making decisions about where to run their lines.
“Clearly there is a desire to acquire development opportunities near mass transit growth – the city will promote higher densities, and both residential and commercial rents are going to be higher, resulting in shorter lease-up and higher final values. You want to own real estate where the people mass,” says David Lehberg, founder and chief executive officer of Knightstone Capital Management Inc., a Toronto-based property developer.
Even when projects are under way, they’re not necessarily a certainty. Many Ontarians recall when then-premier Mike Harris cancelled an Eglinton Avenue West subway line in Toronto that was already under construction in 1995, filling in a tunnel; a light rapid transit (LRT) line along the same road is now being built, at considerably greater cost.
“For a major [commercial] project, land development is a 10-year undertaking from acquiring the land to opening the finished product,” says Andrew McAllan, head of real estate management at Oxford Properties Group, one of Canada’s biggest commercial developers.
The issue for Oxford and other developers is that assembling land around transit corridors depends on local and regional governments determining where they want the transit to be built.
Mr. McAllan is a strong advocate of green and sustainable building practices, which include putting up projects near transit, but the uncertainty over transit decisions makes even the strongest advocates skittish, he says.
“Having certainty is critical, and in the absence, you see hesitation not just on the part of the developer, but also the lender. These are multimillion-dollar projects that rely on financing, and if you don’t have certainty, people are hesitant to commit,” he explains.
It’s not that Canada’s cities aren’t trying. But just as land assembly and financing by developers takes years, transit routes depend on decisions made by multiple levels of governments, as well as planning officials who don’t always necessarily agree, or who change their minds or are forced to accept construction delays.
Building better transit seems to be a slow process almost everywhere:
— In Ottawa, the opening of a new $2.1-billion, 13-stop east-west LRT line that was supposed to be ready May 24 has been delayed twice and is now not scheduled to open until next year.
— In British Columbia, the 21-member Mayors’ Council in the province’s Lower Mainland announced a $7-billion transit and transportation upgrade, with provincial and federal funding, but there has been pushback from residents of Surrey who don’t like the $1.65-billion LRT line slated to serve that city.
— Calgary had been considering a rapid transit link to its airport with its downtown, but a rejection in November by voters of the city’s 2026 Winter Olympics makes the link a lower priority now.
— Edmonton is building at least 13 kilometres of LRT at a cost of $1.8-billion, but commercial building decisions in Alberta may be affected by oil prices, which slumped to their lowest point in more than a year in late November.
— Hamilton is on deck to build a 13-kilometre LRT line, with the Ontario government promising to pay 100 per cent of the capital cost up to $1-billion. But some city council members don’t want the project, which if started right away would take until 2024 to open.
— Mississauga is scheduled to complete a $1.5-billion transit line that would transform a major artery, Hurontario Street, but Ontario Premier Doug Ford says his government has not decided whether to go ahead with the project, which would be completed by 2022 if on schedule.
— The entire Greater Toronto and Hamilton Area (GTHA) appears to be perpetually mired in an endless debate over where and when to build new transit, even though all governments and the private sector agree that it is needed badly. Construction of the $3.5-billion Eglinton Crosstown LRT is well under way, but well behind its original schedule and not slated to open until 2021.
While it’s certain that politicians and bureaucrats will continue to squabble about the size and shape of transit projects, there are ways to speed up decision-making, says Lindsay Wiginton, managing director for transportation and urban solutions for the Pembina Institute, an environmental think-tank.
In a recent blog post, she notes that “smart growth” plans that encourage intensified development around transit corridors can help determine the transit that gets built, which, logically, would give developers and lenders more certainty.
“But growth policy is only one piece of the puzzle,” Ms. Wiginton says.
Municipalities should look at ideas such as limiting parking around key new transit stops, to free up land and encourage more people to use the transit lines. Flexible zoning would also help, because with the long timelines for transit, it’s difficult to determine what kind of commercial development will thrive when a line is eventually built, she suggests.
“The presumption is that mass transit will be a success,” Mr. Lehberg of Knightstone says. "The problem is the waiting … and trying to figure out where and when the transit will be built.”