For a growing number of Toronto companies, the grass is looking greener south of the tracks, several blocks away from Bay Street. Inside the new “south core” financial district—how it’s catering to younger workers and what it means for the city.

Danielle Groen – The Grid

The view from the corner of York and Bremner is a work in progress. Facing south, it doesn’t look like much now: the ubiquitous Toronto tableau of cranes and construction pits flanking a congested line of traffic, with the Gardiner bisecting the horizon and blocking out the lake. But that will soon change. In the next four years, at least four brand new, sky-scraping towers will be visible from this corner—and another four will be nestled in the blocks close behind.

Toronto’s business district is getting bigger. Spurred by a robust commercial market, growing company sizes and limited office space in the financial core, developers are jumping the tracks to set up closer to the water. The location is preposterously attractive: plots big enough to build towers that will be shouting distance from Union Station, with PATH connections back to the original financial district so shuttling workers needn’t brave winter (not that we have winter anymore). Even more desirably, the new “south core”—yes, it has a cute name—is a 15-minute walk from the heart of CityPlace, where many of the newest generation of workers buy their first condos.

Already, the two glistening structures that straddle York Street—the Telus Tower at 25 York, which opened in June 2010, and the Pricewaterhouse Coopers Tower at 18 York, which opened last September—are poaching tenants from the financial district. Insurance companies, engineering firms and mining corporations have all relocated, in addition to the telecommunications and accounting giants. Then, last October, it was announced that Canada’s largest bank, RBC, would make its own leap south, opening a new domestic headquarters on Harbour Street for 2014. When all eight south core buildings are complete, an additional 7.3 million square feet of real estate will have been added to the roughly six blocks bordered by Lower Simcoe, Bay Street, the tracks and the lake. That will triple the size of the existing south core.

“The Bay Street companies that are coming here want to attract workers looking for a live/work/play environment,” says Peter Menkes, president of Menkes, the developer behind the Telus Tower. The businesses have their eye on the employees who have better things to do than commute for an hour—who expect to spend their days in a modern, eco-friendly tower and their spring nights at a Jays game next door. It’s not an accident that, at Telus, the average employee is only 28 years old. Says Menkes: “This is a new core with a new lifestyle.”

Less than a decade ago, it would have been inconceivable for a competitive business to move out of the financial core. Bay Street wasn’t just where you worked, it was where your lawyers and your accountants and your bankers worked, as well. A cab or subway ride wasn’t necessary to conduct business—everyone was conveniently located just across the street. “I heard about a company moving from Brookfield Place—it was still called BCE Place—down to the Queen’s Quay terminus building on Harbourfront,” says Ian M. Thompson, senior research analyst at CBRE Limited, a commercial real-estate services firm. “Back then, some said it was business suicide to go maybe 500 yards away.”

Of course, Bay Street is as much about prestige as location: the grand towers and extravagant lobbies and massive corner offices. The trouble is that kind of opulence can feel a little fussy by our sleek 21st-century standards. These 30- or 40-year-old buildings show their age, with recycled air, a lack of natural light, clunking heating systems and unappetizing food courts. And employees show their displeasure with such a stale workplace by calling in sick a whole bunch. “Absenteeism is a big issue,” Menkes says. “The HR departments of these financial companies play a big role in saying to the executives, ‘We want an environment where our employees are happy and healthy and we can attract new people.’”

The Telus and PwC Towers—among the first skyscrapers to be built in Toronto in almost two decades—have taken full advantage of the current Leadership in Energy and Environmental Design (LEED) green technologies. The Telus Tower, for example, employs the city’s innovative deep-lake cooling system, which uses cold water’s energy to air-condition its building. Floor-to-ceiling glass brings in an absurd amount of natural light, which sensors respond to by dimming the overheads. There’s also a rain cistern for non-drinking water and more than 16,000 square feet of rooftop gardens; any veggies grown can be prepared in the team-building kitchen, where nutrition classes are offered each week. It’s as good for the environment as it is for the bottom line: The Telus Tower consumes roughly half the energy and water a traditional financial tower does.

“This is not your grandfather’s office building,” Menkes says, which might as well have been the tagline on the tower’s promo material. The south core employees streaming through the atrium don’t much look like my grandfather’s office workers, either: skinny ties or Brian Atwood heels, iPads under one arm and a yoga mat under the other. (Their bikes are downstairs—the Telus Tower has 127 bike racks and, next to them, two showers for freshening up.) These are the young urban professionals, Thompson says, “who grew up in the 905, graduated university and just got their first place. They’re not buying condos out in Brampton.” The towers are following the talent, and the talent is right next door. In the slice of downtown Toronto that contains CityPlace—from Lake Ontario to Front Street, Bathurst to Spadina—the population has grown by 434% in the past five years.

But those who don’t live in or adjacent to the south core—those who are coming in on a VIA Rail train or GO bus, or even the TTC—still benefit from the new buildings’ proximity to Union Station. Both the PwC and Telus towers connect through the PATH to Canada’s busiest transportation hub, which is currently undergoing a $640-million facelift. Each new building that opens must provide availability for the next tower to connect to the PATH as well, so the two can snap together like Lego pieces. And these passageways won’t necessarily be buried underground: Oxford Properties, which is developing the new RBC headquarters, has proposed a glass, raised PATH extension that would run perpendicular to (and just underneath) the Gardiner.

According to Stuart Barron, national director of research for commercial real-estate consultant Cushman & Wakefield, these new PATH connections have contributed to “a wider perception of where we can do business.” And as thousands of workers started heading south from the tracks, the axis of the financial district changed. “There’s literally been a shift in the centre point,” Barron says. Bay and King is no longer the beating heart of the financial core—that distinction now belongs to Union Station.

But Bay Street is putting up a fight. The older commercial towers are working to retain tenants and lure new ones by throwing some serious dollars into redecorating. TD Centre has spent more than $100 million on its 77 King St. W. location alone, gussying up its dated lobby and upgrading all of its windows. First Canadian Place has been equally aggressive, spending the same amount on an improved ventilation system, better floors and elevators, and new glass cladding in place of the old marble. Both are chasing the coveted LEED certification.

That work, plus the abiding lure of a Bay Street location, means it’s hard to find space in the financial district. In the last quarter of 2011, vacancy rates were at 5.3%, down from 5.9% just two quarters before—and that’s given operating costs that are at least 15% higher than buildings in the south core. For new or growing businesses, then, the grass is going to look much greener as they get closer to the lake.

Business is good in the new south core, and soon enough, the land by the water will look very different. Not only will glass skyscrapers and condo towers envelop both sides of the Gardiner, but new retail space and restaurants will follow on their heels. (Hot tip: Barron says setting up shop there now is a great medium- to long-run decision.) Certainly, many Torontonians are only dimly aware that we sit on a lake, so there’s something to be said for an urban expansion that brings us closer to the water. But do a fistful of office towers and PATH connections and high-end clothing stores actually make a neighbourhood? Would anyone ever say on a Saturday night, “Hey, let’s hang out at Harbour and York?”

To create a neighbourhood, says U of T Scarborough geography professor Susannah Bunce, “You need a variety of uses, some that are 24 hours, some that aren’t all about money-making but also about enjoying access to the waterfront.” Perhaps pressure for a varied neighbourhood will come from the very workers that the towers originally chased into the south core. This new generation wants to live and work and play in close quarters, but they don’t want all three environments to look tediously the same.

That sense of a neighbourhood is going to require some vigilance on the part of the city as well, to ensure that the expansion of the financial district along the waterfront doesn’t translate entirely into private ownership of the waterfront. Chicago, for example, has a large amount of commercial development by its lake’s edge, but, significantly, it also created the playful and dazzling Millennium Park. Could we have one of those, please? Office towers are dandy, but a park like that by Toronto’s harbour would really be worth a trip south.

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Contact the Jeffrey Team for more information – 416-388-1960

Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
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thinking buying condo at 33 bay street facing west will view be blocked

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