Sleepless in Toronto, but more centres could catch up as 18-hour cities
Housing affordability, lower cost of doing business key factors, PwC report finds
They are the cities that hardly ever sleep, or get only about six hours of shut-eye.
In the report published Thursday, PricewaterhouseCoopers, now known as PwC, says Toronto is the only Canadian city that can count itself among global players such as London, Paris, Madrid, Berlin, Tokyo and New York as so-called cities that never sleep.
But some of Canada’s major centres are almost 24-hour cities and make it into the category of 18-hour cities, says the report. Vancouver and Montreal are already in that category, known as the long-day/seven-day city, while Calgary is ready to make a claim on the same status.
“Many more, ranging from Quebec City to Ottawa and Kitchener-Waterloo to Edmonton could evolve into 18-hour cities,” said the consulting firm in its report, Emerging Trends in Canadian Real Estate, which is now in its 39th year.
A clear advantage these cities have is better housing affordability and a lower cost of doing business, according to the report. As part of the report, 800 individuals were interviewed while survey responses were also received from more than 1,600 individuals.
“Affordability is a dominant theme amongst all residential real estate developers and clearly it is mostly in Toronto and Vancouver,” said Frank Magliocco, a national real estate leader with PwC Canada. “What we are starting to see out there is people looking at the outside of the suburban centres across the country to ensure affordability issues are addressed.”
The report, referencing data from Statistics Canada, notes the percentage of young adults living at home continues to rise across the country. In 2006, 33.1 per cent of those between 20 and 34 were living with a parent, but that climbed to 34.7 per cent in 2016. Toronto was the leader in 2016 with 47.4 per cent of young adults living with a parent, up from 44.6 per cent a decade earlier.
PwC believes the government has mostly been tackling the demand side with its housing measures, but not the supply side. The study notes demand is not slowing and forecasts net migration of 400,000 people to the Greater Toronto Area between this year and 2021, with the figure made up entirely of international arrivals.
The rental apartment picture isn’t expected to get much better for tenants either. Chris Potter, the national real estate tax leader with PwC, said tougher rent control rules in Ontario, which limit increases to inflation and are capped at 2.5 per cent annually, are already impacting the supply and creating bidding wars.
PwC said the national occupancy rate is about 95 per cent, but in Toronto and Vancouver most buildings are almost 100 per cent full.
“We are almost going back to the concept of key money from the early 1980s,” said Miriam Gurza, managing director, national real estate consulting leader with PwC Canada, referring to the sometimes illegal practice of tenants paying landlords under the table to secure apartments.
PwC predicts there will be more co-living in the future as people tackle the cost of housing. It also predicts more multi-generational living in the future.
“You think about Toronto and other cities,” said Potter about the GTA’s 24-hour status. “All of these (cities) seem to have affordability issues. What we started to see in the U.S. was, especially among younger people, affordability was a challenge. They decided regardless of what it would do to their careers, (to go) to smaller centres because they found affordable places to live. And what’s happened is some of the cooler jobs followed and what developed was a more vibrant core in those centres.”
That’s happening in Canada now. But don’t wait too long to move: PwC says Montreal, Vancouver and Calgary may gradually develop into 24-hour centres.