Short-Term Transit Pains, Long-Term Real Estate Gains
October 18, 2022 5 Minute Read
For years, downtown Toronto residents have struggled with an overcrowded subway system that slows their commutes and makes it difficult to get around the city.
The Ontario Line promises to change all that.
Announced by the provincial government in 2019, the Ontario Line, which began preliminary construction work earlier this year, will help relieve crowding on the subway system in the downtown core, particularly along the Yonge Street stretch of Line 1.
Better transit downtown promises a ton of positive knock-on effects for commercial real estate tenants and landlords, whether they’re in retail, running an office, or operating a hotel. Not only will more people frequent the downtown core, but an efficient transit network is also essential in attracting and moving employees.
“Toronto has seen exponential population growth in the last decade,” says CBRE Toronto Managing Director Michael Case. “Subpar transit threatens to limit economic growth, which is of great concern to the citizens of Toronto and our clients across the commercial real estate spectrum.”
The Ontario Line will provide a new path through Toronto’s downtown, extending from the Exhibition/Ontario Place station in the southwest to the Science Centre in the city’s northeast.
The line will extend over 15.6 km and intersect with more than 40 transit routes, including GO trains, TTC subway and streetcars, and the upcoming Eglinton Crosstown light rail transit line.
The Ontario Line will help transit riders transfers between these routes and alleviate crowding in downtown Toronto’s busiest subway stations. A Government of Ontario study said the new line would reduce crowding by up to 15% on the busiest stretch of the TTC’s Line 1, and by up to 22% at Bloor-Yonge station.
Pain Before Gain
There’s going to be a lot of pain before that gain, however.
Long-term closures of stretches of Queen Street for the line’s construction will no doubt cause major disruptions to downtown businesses. “We’ve seen how short-term disruption, as frustrating as it is, can have major long-term benefits. Businesses operating in the affected areas may need extra support to see them through the construction,” says Case. “But once the new line starts operating, there will be obvious benefits from having a more efficient flow of people into and out of the core.”
For an idea of how the Ontario Line transit project will impact Toronto, we can look to Montreal’s experience with its soon-to-open Réseau express métropolitain (REM), a light rail network.
Spanning 67 km over 26 stations, the REM network will connect downtown Montreal to previously underserved areas, such as the West Island, South Shore and North Shore.
But the process hasn’t been all sunshine and rainbows.
To the temporary dismay of both residents and businesses, the project triggered the appearance of an abundance of orange traffic cones in Montreal’s downtown. The closure of major arteries such as McGill College Avenue clustered traffic coming into the core, while ongoing construction posed a challenge for businesses operating next to the sites. Landlords leasing space in the area initially faced skepticism from prospective tenants who struggled to envision a future without construction and with the significant benefits that the project will provide.
Thankfully, Montrealers are now seeing the light at the end of the tunnel. As the project approaches completion in 2024, the areas around the new stations are already noticing benefits.
“The REM will make it easier for skilled workers to commute between home and work,” says CBRE Montreal Vice President Jeremy Kenemy, who specializes in office and research lab leasing. “This could be a game changer in attracting and retaining top talent.”
The project will help support Montreal’s booming life sciences sector by facilitating travel between the core and the suburbs. “By connecting downtown universities, hospitals and research centres to life science hubs such as the Montreal Technoparc and Nexus 40-13, the REM will help ease challenges to employment.”
Companies located close to REM stations will be more appealing to graduates living downtown who may not have access to cars and previously would have had to take a combination of metros – Montreal’s subways – and buses to get to work, Kenemy notes.
Employees living in the suburbs will have the option of riding the REM to work downtown to avoid traffic entanglements, construction detours and exorbitant parking fees. Residential projects have already begun to spring up around Quartier DIX30, by the South Shore terminal, where the first trains will be running.
“This will promote the free-flow of intellectual capital between life science hubs and downtown, making nearby offices much more attractive to tenants,” says Kenemy. “It’s becoming an important part of the conversation for tenants in the market for space.”
Playing the Long Game
Like the REM in Montreal, the Ontario Line promises to deliver plenty of upside for downtown Toronto tenants and property owners, not to mention those looking to get to work in the core and return home at the end of the day without banging their heads against the dashboard.
It will take some time to reap those benefits, of course, as the Ontario Line is still a decade away from becoming a reality. But before long it will begin to materialize, and demand for office and retail space in proximity to the new line will undoubtedly ramp up.
“It’s exciting to imagine the day when the Ontario Line is a reality,” says Case. “If Montreal’s experience is any guide, Toronto can look forward to a similar surge in real estate momentum as the project comes to fruition. When that time comes, CBRE will be there to help our clients maximize their advantage.”
Stephanie Garant considers real estate to be a critical component of economic growth and social development. After several years in marketing and sales, she joined CBRE Montreal’s capital markets team in 2018.
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