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It's the new norm for the waterfronts of Vancouver, Montreal, Toronto and other cities: Lands once used for shipping and industry are morphing into cities of the future, with winding promenades lined by tree-filled parks, lux condos, and buildings occupied by trendy retailers and fashionable offices.

Many argue this is a promising new use of tired, underutilized and highly valued land. Makes sense, right? With the exit of the manufacturing economy lining the water, why not house the chic information workers of tomorrow there?

Not so fast, say commercial property insiders and urban planners.

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With gas prices spiking and businesses seeing bottom lines hit dramatically by transportation costs, a theory abounds - and it is only a theory at this point - that the future will see an increasing need for downtown industrial lands, particularly on waterfronts, as manufacturers and light industrial players seek shorter routes to market for their products.

"It's a prediction based on what I think is very sound reasoning, and I agree with it," says Brent Toderian, director of city planning for the city of Vancouver. "I think we're going to see a change in globalization because of energy costs. Cities that have preserved their flexible job-space land and lands for industrial uses are going to be the more resilient, successful cities in the future."

In Mr. Toderian's view, many cities have surrendered their waterfront industrial lands for mixed use projects (and he's quick to point out that, to a certain extent, Vancouver is the poster child for this phenomenon) without asking a critical question: Is the industrial land really not viable?

"Too many cities are jumping to that conclusion just because it looks like there isn't as much activity on these lands as one might expect," he explains. "We found through detailed survey work of our industrial lands in Vancouver that they represent a very robust economy."

Mr. Toderian and his team determined that just 10 per cent of Vancouver's downtown land is currently used exclusively for industrial activity, such as manufacturing, warehousing or distribution. And yet the space houses 50 per cent of the city's jobs.

The phenomenon isn't unique to the West Coast. According to Raphael Fischler, director and associate professor of McGill University's School of Urban Planning, Montreal's Griffintown and other areas along the Lachine Canal have seen major redevelopment in recent years as working-class neighbourhoods with strong industrial footprints have become high-end condo developments, largely thanks to their proximity to the water.

"Local residents were angry that job opportunities were being removed," Mr. Fischler recalls. "It's important for a city to maintain cheaper places where start-ups or smaller companies can actually continue to function without having to go to the suburbs."

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Mixed-use waterfronts look better in postcards than gritty industrial ones. And cities gentrifying their waterfronts also hope to increase their tax bases.

Paul Morse, Toronto-based senior managing director of commercial real estate brokerage Cushman and Wakefield Ltd., says industrial buildings typically have a net value of between $5 and $6 per square foot, compared to condominiums that carry values of between $10 and $13 per square foot. That makes the introduction of the latter a more lucrative short-term proposition for city tax departments.

But those figures are deceiving, says Mr. Toderian. "You can't and shouldn't chase higher taxes because with residential and mixed-use comes higher demand for the services that taxes pay for."

Joe Berridge, a partner with Toronto-based urban planning consultancy Urban Strategies Inc., says Toronto has maintained a commercial presence on its waterfront with the introduction of Corus Entertainment's new headquarters there, as well as a new campus for George Brown College, while still preserving an active industrial presence at the iconic Redpath Sugar refinery and in the port-lands area to the east.

It's in those highly-industrialized eastern port lands that he says provide evidence of companies in some industries which have opted to stay close to downtown to shorten their supply routes. In this case, he says, concrete manufacturers have set up shop there to put themselves within close proximity of the city's numerous condo and commercial developments.

He's quick to note, however, that industry hasn't necessarily been chased from waterfronts such as Toronto's, but rather left in search of better transportation routes in the suburbs and a closer proximity to the 400-series highways.

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Although Mr. Berridge isn't convinced gas prices will have significant impact on where industry wants to situate itself in the future, he agrees that an industrial footprint will remain vital to Toronto's commercial mix and should be maintained to preserve jobs in the downtown core.

Still, he sees that industrial complexion evolving to better suit the city's needs, with more recycling and construction-material supply firms continuing to establish their presence in Toronto's eastern waterfront.

"I think you're likely to see that contingent of people continue to be at the back of the waterfront and there's no inconsistency with having that and condos, parks and office buildings and universities in the more public parts," Mr. Berridge says.

According to Mr. Morse, demand for industrial space on Toronto's waterfront remains as robust as ever as more light industry seeks downtown space.

"There's a real need for light industrial warehouse, distribution and storage space," he says. "We have two industrial listings for 20 acres of land for sale and there's significant interest from investors in the area."

In Vancouver, areas such as the Southeast False Creek Flats and South Vancouver Industrial Lands have seen a recent influx of green manufacturers producing environmentally-friendly components such as hydrogen fuel cells and solar panels, according to Mr. Toderian. He adds that industry arrived in search of three things: Cheap land, cheap taxes and cheap building costs.

As he puts it, commercial developers and many downtown residents need to change their view of what industrial space means to a city. "In the context of this incredibly strategically important land, it's the residential that's the nuisance, not the industrial," he says. "The job space is critical to our sustainable, complete city model."

Special to The Globe and Mail

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