Downtown's commercial vacancy: do the numbers tell the whole story?
City stats have downtown commercial vacancy rate at 12.8 per cent
On the surface, downtown Hamilton's vacancy rate is improving. According to the city, it's sitting at 12.8 per cent, down from 20 per cent five years ago.
That seems like good news — but do the numbers tell the whole story? Some say no, and that there is much more that has to be looked at for an accurate picture of how many businesses are setting up shop in the downtown core.
Neil Everson, Hamilton's director of economic development, told CBC Hamilton that he's pleased with the direction the downtown vacancy rate is heading. "That's a pretty good rate," he said, adding, "We'd love to have zero, though." But those numbers can seem a little skewed, depending on who is doing the measuring.
According to an annual commercial survey of downtown core office space by Blair, Blanchard and Stapleton Real Estate, downtown Hamilton's commercial vacancy rate was sitting at 22 per cent in 2012. That number doesn't line up with the city's for a couple of reasons:
- Blair, Blanchard and Stapleton only measure commercial space over 20,000 square feet, as opposed to the city, which measures everything
- The city's estimate also includes spaces like the federal building, which is somewhat outside normal commercial estimates
"That has the effect of bringing the rate down," said Evan Apostol, a sales representative with Blair, Blanchard and Stapleton. "Would it really affect the vacancy rate downtown if the Federal Building wasn't considered?"
By contrast, the GTA had an overall vacancy rate of 6.7 per cent in 2012 for commercial space over 20,000 square feet, according to a report by Deloitte real estate. Downtown Toronto's commercial vacancy rate is sitting at just over five per cent.
This shows that Hamilton is still lagging behind the GTA when it comes to large commercial entities, but smaller boutique shops downtown help the core's vacancy rate drop.
Empty buildings in downtown Hamilton are a problem with decades-old roots, stemming from when businesses like Firestone, Westinghouse and Stelco left the core, Apostol says. "They effectively left overnight, and that takes time to recover from," he said.
Booming restaurant scene a help, BIA says
Kathy Drewitt, director of the Downtown Business Improvement Area, says she expects the vacancy rate downtown to shoot up a little in the near future. The businesses on King Street facing Gore Park that left when those buildings were slated for demolition will have an effect, she says.
"It's going to be even higher in 2013," she said. Last year, the downtown BIA had 35 new businesses sign up — a banner year. This year, she's only had nine. "It has slowed down in my opinion quite a bit," she said.
But that doesn't mean that everything is gloomy in the core. Drewitt says the rate at which buildings have been changing hands to Hamilton ownership has been "phenomenal." That means less absentee landlords and more local people taking control of the city's commercial space, she says.
"I'm really happy there's a shift happening in downtown Hamilton's property, Drewitt said. "Having more local ownership is phenomenal."
And even with more empty space than some would like, Drewitt says the downtown core is still better off than it was five years ago. A big contributor has been downtown's booming restaurant scene, she says. "We're still not there yet," she said. "But they are all fostering more economic vitality on the streets than ever before."
Priced out of the GTA
So, why the shift in the last five years? Everson says good marketing and PR is helping to draw more interest downtown.
"I think just the activity downtown is generating interest," he said. "People are seeing cranes in the air and it's drawing them in."
Mathieu Langlier, the executive officer at the Hamilton-Halton Home Builders' Association, says the word about Hamilton is getting out there to other centres. "And it's giving us a good reputation as a place to invest," he said.
He predicts Hamilton will see speedy population growth in the future — in large part driven by first-time homebuyers who have been priced out of the market in the GTA.
"More and more you have positive messages going out," he said. "More commercial, more growth, more economic traction."
All of this paints a picture of a downtown core that is complicated, but still showing an upside, Drewitt said.
"It's just that vacancy rates alone don't paint an accurate picture."