Key Findings

What kinds of economic activities are we planning for?

The answer to this question is found in an understanding of how the makeup of the GGH economy is changing. The region's economy has been undergoing a dramatic economic restructuring, driven by a transition to a knowledge economy, and underlying dynamics of globalization and technological change. This transition has been under way for some time (as noted in Planning for Prosperity).

However, the most recent years represent a substantive shift from past years, and a distinct new economic structure and landscape are emerging. This is not the linear continuation of a past trajectory. The regional economy and landscape have shifted into a new gear, with different economic characteristics and different demands of cities and urban environments.

This shift is challenging routine functions, work, firms, and industries, and fostering the growth of skilled, tech-related, and knowledge-intensive activities. Booming Archetypes include Soft Tech, Finance, High Order Business Services, Arts and Design, Higher Education, and Logistics. With few exceptions, manufacturing employment is in decline. The impacts of e-commerce are being felt in a loss of Other Wholesaling employment and automation in the loss of Back Office jobs.

Land use planning is facing a different mix of economic activities from that of the past and we should be planning proactively to accommodate this new mix in the GGH.

What kinds of urban environments, and where, should we be planning for businesses?

The new geography of growth

As the makeup of the economy transforms, so too does the economic geography of the region. Different types of economic activities demand different locations and urban environments. Recent years have been marked by an unprecedented level of concentrated employment growth. Geographic concentration of the economic activities that drive the regional economy is the defining characteristic of the new GGH.

Several key drivers together propel this new level of concentrated economic activity:

  • The GGH economy is restructuring toward more knowledge-intensive activities, which benefit from co-location with other related firms, industries, and resources; more knowledge-intensive activities means more geographic concentration.
  • Automation, which tends to concentrate employment in the larger urban areas, and within those urban areas in a few locations, is expanding in scope.
  • Traded services, which tend to concentrate geographically, are growing.
  • Capital is increasingly concentrated, as the globalization of markets means bigger firms, often achieved through consolidations, mergers, and acquisitions.
  • The tendency toward geographic concentration is further reinforced by the decline or slower growth of more geographically dispersed activities, especially routine activities in manufacturing, wholesaling, and back-office uses.

Hyper-concentration in Downtown core

A striking trend has been the level of growth of employment in and around Downtown Toronto. This trend is a reversal of the suburbanization of employment that dominated the 1980s, 1990s, and early 2000s. Some 67,000 new "core" jobs and 85,600 total jobs located in Downtown Toronto between 2006 and 2016, including jobs in the Soft Tech, Finance, High Order Business Services, Higher Education, and Science-Based Archetypes.

Over time, this growth may be tempered by the automation of some higher-skilled activities, but likely not enough to offset overall growth.

Firms in the downtown tend to be globally integrated or national corporations. They cluster with the high order business firms that serve them, smaller tech firms, and start-ups such as fintech enterprises. Firms, employment, and services co-exist at extremely high density, mostly in high-rise towers.

Downtown Toronto is served by a high-order, fan-shaped regional transit system with Union Station as its focal point. This transit connectivity makes Downtown Toronto the only place in the GGH that can reliably access virtually the entire region's labour market, a critical locational factor for knowledge-intensive activities. As major roads and highways in the GGH become increasingly congested, making auto travel unpredictable and increasingly time-consuming, high-order transit provides more reliable access to jobs by workers and to workers by employers. Downtown's proximity to dense urban neighbourhoods also makes it accessible to workers who walk or cycle. The unparalleled access to labour is no doubt a major factor attracting knowledge-intensive firms to Downtown Toronto. Its attractiveness to workers is also enhanced by amenities such as shopping, restaurants, cafes, bars, and services.

The complex agglomeration economy of Downtown Toronto attracts economic activities and firms. This environment of dense, diverse firms, institutions, and workers allows for the formal and informal exchange of knowledge and ideas; fosters connections, networks, alliances, and deals; and helps get new ideas off the ground. Even a stalwart suburban company like Microsoft recently announced its relocation from suburban Mississauga to Downtown Toronto.[1]

Edges of Downtown

A few other locations in the GGH have seen concentrated employment growth, albeit at levels considerably lower than in Downtown Toronto. Employment in Arts and Design and Soft Tech, for example, have been attracted to the areas flanking Downtown Toronto to the east and west, which benefit from being close to the central agglomeration, but not in it. Firms in these areas tend to be smaller and may have links with downtown firms, but cannot pay downtown rents. In many cases, these smaller firms collaborate to form project-based production networks, and there is a high degree of home-based work.

These areas have older, repurposed industrial building stock, where work spaces are integrated with residential uses, and amenities such as shops and cafes, all highly accessible by transit, walking, or cycling.

The Suburban Knowledge-Intensive Districts (SKIDs)

The performance of the Suburban Knowledge-Intensive Districts in attracting employment has been patchier between 2006 and 2016 than it was in the period (2001-2011) documented in Planning for Prosperity. There is greater variation among the SKIDs. Only the Airport and Meadowvale SKIDs grew between 2006 and 2016, while the others either lost core employment or remained stable. Employment growth in the SKIDs was accounted for by the Soft Tech, Finance, Pharma, Telecoms, and Science-Based Archetypes, and to a lesser extent by Hard Tech.

The slowdown in SKID growth reflects the shift in GGH employment geography. Downtown Toronto is attracting not only existing development from suburban areas, but also new development that might have previously located in the SKIDs. Businesses in new and emerging sectors are attracted to the downtown. It has become a struggle for the SKIDs to compete. Despite some recent transit improvements (in Markham, Waterloo, and the Airport), SKIDs are still auto-oriented, which becomes an increasingly difficult proposition as highway congestion rises. Further congestion is predicted - even if the current Regional Transportation Plan is fully implemented.[2] Unlike Downtown Toronto, SKIDs cannot provide access to the full regional labour market by transit.

The urban environments of SKIDs tend not to attract employees. They lack a high-quality, walkable public realm, offer little in the way of employee services or amenities, and lack close physical integration with the transit available. Meadowvale, which has seen the most employment growth, still suffers from auto-dependency despite being the location of a GO station. Unfortunately, the Milton line, which serves the 36,000 core employment jobs in the Meadowvale SKID, is not prioritized for two-way all-day RER service under the Regional Transportation Plan.

Dispersed growth

Areas of employment growth elsewhere in the GGH include the new urban edge along Highway 407, along with some Hard Tech growth in Burlington and North Guelph. Logistics employment has appeared in Brampton, Mississauga, Caledon, Vaughan, Pickering, Ajax, Cambridge, and Bradford, and along Highways 401, 407, and the QEW. Small amounts of new Back Office employment are scattered across the City of Toronto and surrounding municipalities. And Telecoms and Pharma exhibit small concentrations of employment growth in suburban areas outside the SKIDs.

The loss-scape

This spatial analysis of the GGH has shown significant areas of core employment loss - in southern Oshawa, across the inner suburbs of the City of Toronto, south of the QEW, in Hamilton city centre, and in Kitchener and Cambridge. Individual Archetypes also show specific spatial patterns of job loss.

The megazones were net losers of jobs between 2006 and 2016. In areas outside the SKIDs that they include, megazones sustained losses in Hard Tech, Other Manufacturing, and Other Wholesaling.

Many areas experiencing net loss are in well-situated, older industrial districts across the region. New growth, however, does not mirror the existing distribution of employment, even though declining employment areas imply vacancies and development potential.

The geography of disruption

Automation is a long-term, transformative process that is well under way, while trade disruptions tend to occur as individual events. This analysis shows that areas across the whole GGH are vulnerable to both kinds of disruption, reflecting the dispersed nature of vulnerable industries. Some municipalities appear vulnerable to both types of disruption - such as Cambridge, Guelph, and Caledon.

[1] Ali Raza, "Microsoft Canada leaving Mississauga for Toronto in 2020," Mississauga News, September 15, 2018.

[2] Analysis by Metrolinx for the Draft Regional Transportation Plan. Under the RTP, there will be 3 million more cars on the roads during this peak period every day - almost 50 per cent more than today. Congested travel during the peak is expected to increase 122 per cent. See also Pamela Blais and Marcy Burchfield, "Why a $45 billion transportation plan fails to increase transit ridership," Toronto Star, November 20, 2017.