Last week, major news was announced (or leaked, depending on your sources), that Google’s Sidewalk Labs will be coming to Toronto’s east harbourfront. It will be Google’s attempt at creating a high-tech, data-driven mini-city right in our very own megacity, Toronto. Google has already committed $50 million USD into the planning and proposal stages, with the first public hearing on November 1st. The City of Toronto will be cleaning up the site for Google so that they can develop it in the future. The official site hasn’t been confirmed just yet but it was announced that this redevelopment will include high-tech features such as self-driving buses and taxibots, artificial intelligence controlled parking, underground garbage robots, modular and flexible buildings, etc. The plan is to create 3.3 million square feet of residential and commercial space. For some context, 3.3 million square feet is approximately five of “The One” towers (85-storeys high) worth of space!
Below is a map of what the area looks like now. I’ve outlined where the development could potentially happen and which developer has already been active in the eastern harbourfront area.
Below is what Google’s vision for the eastern harbourfront looks like.
So what does this all mean for Toronto’s “East Downtown”? Definitely get ready for a huge boom in the next 5-10 years. Here are just a few things that are scheduled to come:
– Google’s Sidewalk Labs
– East Harbour by First Gulf
– Downtown Relief Line
Surrounding neighbourhoods that have development happening right now are the Distillery District, Canary District, and Queens Quay East. Now is definitely not the time to sleep on these areas, especially with this big announcement!
The other major tech company that is looking for a new headquarter location is Amazon. Unlike Google, who has accepted Toronto’s invitation for their plans, Amazon is “shopping around” North America for a new place to call home. The City of Toronto has already submitted their Request For Proposal (RFP) to Amazon. Below are some interesting tidbits from the Amazon RFP as some food for thought.
Remember, this is our City putting together a sales package to lure Amazon here. This information gives us a good perspective on the Toronto real estate market in comparison to other global cities. They say a picture is worth a thousand words, so I’ll use these pictures below to do most of the talking.
As per the proposal put together by the City, we have a population of 7.8 million people and it’s growing fast!
That’s a lot of people! Oh, and here’s our growth trend in the last five years (before Trudeau doubled the number of immigrants allowed in 2017). It’s better than every city, except Dallas.
Now let’s look at the style of properties available in the GTHA. As you can see, Toronto is over 85% Apartment/Condos. Interesting, isn’t it?
Let’s take a look at the upcoming supply that is scheduled to come up in the next few years. We have about 80,000 units coming online, which may seem like a lot, but actually isn’t. From 2010-2014 we got about 20,000 units per year and it was all absorbed. We still have a supply issues because our population is growing faster than how fast we build up this supply – which means any supply that we get will likely get absorbed. Hence, this is why the pre-construction market is so hot these days.
Now here is the tech salary (which is higher than average salaries of different industries) to rent ratio. It’s only at 20% of the gross income right now compared to 30% in the other cities. Perhaps there is more room to grow?
Next, here are condo rents downtown compared to other tech cities. Toronto is still pretty low compared to the other major cities in North America. Remember, we have the third largest population in North America. Perhaps there is more room to grow here as well?
When I look at the proposal that Toronto has put together for Amazon, despite what the Liberal government’s “market cooling” interventions may imply, it looks like they’re trying to sell Amazon on the fact that we’re still cheaper than most other major cities in North America.
We know that Google has already confirmed this very monumental deal. If Amazon comes to join in on the party as well, then Toronto will get even bigger and more expensive than it already is. It looks like there’s only one way we’re headed from here folks, and that’s up!
Until next time, Happy Real Estate-ing,