There’s lots of talk about a commercial building boom in the centre of megacities such as the Greater Toronto Area, but big things are also happening at the edges.
Ontario Power Generation (OPG) plans to break ground early in the new year for its new headquarters in Clarington, Ont., near the Darlington nuclear station it owns and operates, and which is being refurbished. When the headquarters opens in 2024, OPG plans to move more than 2,000 office employees from the 15 different sites where they now work, around the GTA and neighbouring regions.
Edge development – the construction of new commercial and industrial facilities at the fringes of megacities – is not necessarily new, but it’s experiencing a resurgence in many urban areas.
Shifting live-work patterns, the high cost and stress of commuting and the departure from downtown of many younger workers because of high housing costs are all contributing to increased interest in commercial real estate in outer regions.
“We’re in the throes of a major paradigm shift,” says Ken Greenberg, urban designer, teacher and principal at Greenberg Consultants. Speaking at a webinar sponsored by the Urban Land Institute in June, 2020, he explained that Toronto’s satellite cities – once dismissed as car-dependent suburban communities – are now being reimagined as “work, live, play” destinations with vibrant downtown cores of their own.
COVID-19 is “forcing us to do things in a more resourceful and urgent way,” Mr. Greenberg adds.
Clarington is a good example of this kind of future, says its mayor, Adrian Foster. “Getting the OPG head office could be the largest single piece of economic development that has landed here,” he says.
It makes business sense for OPG’s offices to be close to the Darlington Nuclear Generating Station, its flagship, which provides 20 per cent of Ontario’s electric power. But Clarington, which encompasses the towns of Newcastle and Bowmanville and two townships, has lured more companies. For example, it has also become home to a massive Toyota parts distribution centre, opened in December, 2020.
The 350,000-square-foot, 30-acre parts facility serves Toyota and Lexus dealers and customers from Manitoba to Newfoundland.
The traditional 20th-century reasons for a big company choosing a commercial site at the edge were cheap land and easy transportation. Toyota chose the area for different, 21st-century reasons, Mr. Foster says.
“In our discussions, what really attracted them was quality of life for the people who work for them,” he explains. “They wanted to locate in a place where people can live and do things.”
Perhaps as another sign that these corporate moves to the edge are more than a fluke, Clarington has also attracted East Penn Canada, which makes and distributes Duracell batteries for vehicles and large machinery, and is moving its head office here from more centrally located Ajax, Ont. The 200,000-square-foot battery facility will bring an additional 200 jobs.
It still may seem counterintuitive to see such strong growth outside of Toronto, but companies are increasingly looking for more than cheap land next to busy highways, says James McKellar, director of the Brookfield Centre in Real Estate and Infrastructure at York University’s Schulich School of Business in Toronto.
“We will never go back to where we were before the pandemic,” Prof. McKellar says.
He sees jobs and development moving in two directions. Workers whose jobs require personal interaction are gravitating toward city centres. People with more generic “hard” skills – jobs that don’t require regular face-to-face meetings – are moving toward the edges of megacities.
“There’s a whole category of jobs now that are tethered to the internet, and they can work anywhere,” Prof. McKellar says. “Being able to connect with everyone, whether they’re in the same location or not, makes it easier for people and companies to locate at the fringes.”
There’s more balance now between downtown areas and the edges in terms of job creation, commercial development and growth, Prof. McKellar adds.
“What we consider the edge of a region is more amorphous now,” he says. “A few decades ago, many companies competed to put up showcase headquarters, but now they’re looking at what location is most practical to develop ideas, manufacture and ship, and that can be either at the centre or the edge, depending on the company.”
Housing costs are a big reason why edges are attractive, too, he adds: “The jobs follow where the people move rather than the people following the jobs.”
The GTA is a notable example of a megaregion with substantial edge development, but it is far from the only one. Cincinnati, for instance, was the fastest-selling housing market in the United States last fall and has gained 7,600 new residents since the beginning of 2021. It has 69 construction projects under way this year, worth $5.2-billion, most of them outside the city core.
“We’ve growing into a mega-region with Dayton, Ohio, 50 miles to the north, and a lot of commercial activity is in the area connecting with us there,” says Kimm Lauterbach, president and chief executive officer of Cincinnati’s Regional Economic Development Initiative. “A lot of companies still look at locating in Cincinnati’s core, but there’s a lot of activity at the edges now, too.”
Many edge regions try to lure businesses by offering tax breaks and incentives such as new highways, but that wasn’t the case in Clarington, Mr. Foster says. Instead, it positioned itself as a good place to live and work without having to commute. For those who do need to travel, he notes that commuter rail service is expanding in the region.
Prof. McKellar says that’s a better approach than building more roads, as Ontario Premier Doug Ford proposes with a new $6-billion highway cutting into the province’s Greenbelt.
“Bad idea, a waste of money. The solution is not to have more roads, it’s to get cars off the roads,” he says.