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Retail Dynamics in the Toronto Underground System: 1993-1997

by Ken Jones

The Toronto underground is an example of one type of planned inner city retail environment. These can take a variety of forms and operate on a number of scales.

North American examples include: underground systems (e.g., Montreal, Toronto and Chicago); skyways (e.g., Minneapolis-St. Paul, and Calgary's 15 plus) or multi-level paths (e.g., Edmonton Pedway and Winnipeg Walkway). However, despite these structural variations, each of these planned retail-pedestrian complexes is a reflection of and a response to a complex set of environmental, economic, infra-structural, and socio-political realties in which they are imbedded.

The environmental considerations are the most obvious. Typically, the largest and most successful inner retail centres have been developed as climate-controlled spaces. In cities that experience northern continental climates (e.g., Montreal, Minneapolis-St. Paul, Edmonton, Calgary and Winnipeg) these indoor environments provide relief to their local, "day-time" populations from the severe winter conditions. In addition, for these areas to be functional they must be perceived by the local citizens as safe, well designed and accessible urban spaces that are integrated into the broader urban fabric.

From an entrepreneurial/real estate perspective, these retail spaces must serve a minimum threshold population to be successful. The most successful indoor city complexes are associated with large day-time work populations. In the case of Toronto, over 100,000 office workers are employed in the office towers that are directly linked to the underground system, with another 230,000 person employed within a half kilometre radius of the underground mall system. This day-time population represents a real market income that is equal to a city with a population of approximately 700,000-750,000. This resulting spending power provides the Toronto underground with the necessary market to support over 1200 retail, restaurant and business and personal service establishments.

From an economic point of view, three other prerequisites help assure the development of a successful underground retail complex. First, indoor cities should benefit from the existence of a strong and well-defined urban tourism component. Ideally, the retail system should be physically linked with the necessary hotel and convention facilities. Second, the retailers must be supported by a strong local residential population base. Typically, this involves the existence of a significant inner city residential component comprised of apartment and condominium units. Finally, the indoor city must be directly connected or in close proximity to the cultural and artistic elements of the community such as art galleries, museums theatre districts and sport complexes. Again, for the case of the Toronto, the underground is connected to the Hockey Hall of Fame, Sky Dome and Roy Thompson Hall and is in close proximity to the three major "inner city" theatre districts. Given the scale and popularity of the system, it is now likely that any new development in the core south of Dundas Street will be integrated into the underground network (e.g., the new Air Canada Centre and planned Yonge-Dundas entertainment complex). These physical connections assure that Toronto's indoor city benefits from the traffic and image generated by these urban"recreational/cultural" destinations. However, despite these market advantages, the core of the Toronto is not immune to the general economic conditions and the trend toward the suburbanisation of retailing. As result, between 1989 and 1995, the core experienced a 4.8 per cent decline in retail sales.

From an infra-structural perspective it is essential that the underground system must be integrated with the existing public transit system. In the case of Toronto, the underground as direct access to the Toronto subway system through 5 subway stations and 12 physical connections. In addition, the underground provides, through the Union Station link, the only access route for the downtown core with the region's commuter rail system (GO Transit). These connections assure an average week-day flow of 325,000 pedestrians.

Finally, the indoor city concept must be acceptable from and urban design and planning perspective. Their must be a willingness at the municipal government level to support inner city mega projects and to enter into partnerships with the private sector. In the case of Toronto, the underground city provided the development community with a means of maximizing rental returns on their investment and extending their permitted "times coverage". At the same time, the underground provided a means of separating "people and traffic" in the core -- a central tenant of 1960s planning policy. Municipal planning projections viewed the underground path system as a solution to the problem of "surface pedestrian congestion" that was forecast to occur when pedestrian volumes exceeded sidewalk capacity in the 1980s.

It must be recognized that underground retailing is not without problems. A number of controversies exist. Principal among these is the debate between the ownership of public and private spaces. Enclosed commercial environments are normally private spaces. As such, they normally prohibit some basic freedoms (e.g., the right of free speech, the right to picket, the right to distribute political/religious materials) and typically certain groups are excluded (e.g., teenagers, the old, the poor -- the disenfranchised). The control over large parts of the urban fabric and infrastructure by private ownership that operate only during business hours raises some fundamental political questions. Furthermore, the emergence of indoor cities in many urban inner city areas has created two competing and often disparate co-existing urban forms -- the dynamic unplanned streetscape, and the controlled homogeneous indoor city environments. The necessity to integrate and to create connections between these two systems remains a major planning challenge.

This report initially examines the changing retail structure of the Toronto underground system over the 1993-98 period. The focus of this section will be on the characteristics of the tenant mix of this retail environment. Then the paper will examine three indicators of retail dynamics - retail turnovers; vacancy rates; and stability coefficients. Finally, the report will examine the degree of spatial variation in the retail structure of the underground system. This empirical analysis is based on data collected by the Centre for the Study of Commercial Activity (CSCA) at Ryerson University. Since 1993, CSCA has tracked the annual changes in the tenant mix in the Toronto underground mall system on a regular basis. Each summer, the trading name, location, and SIC code have been collected for each occupant in the system and the resulting data base has been incorporated into a GIS format. These data inventories and associated digital maps provide the information required to evaluate tenant stability; variations in retail turnover rates, trends in vacancy rates, and annual tenant change in the retail structure of the various underground shopping complexes.

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