The Buried Giant
“Employers will go where the talent is.” With that succinct phrase, George Spezza explained a move worth millions of dollars and 400 jobs: Tim Hortons is coming downtown. After 50 years in Oakville, Ont., the iconic chain recently announced a move to the heart of Toronto’s Financial District at King and Bay, jockeying for position at the locus of Canada’s largest employment zone, and its economic engine.
It fits a pattern. Speaking to the Toronto Star, Spezza, the City of Toronto’s director of Business Growth Services in Economic Development and Culture, explained the move as symptomatic of a “huge concentration of younger talent in downtown area.” Experiencing record low vacancies amidst an office construction boom, the downtown of Canada’s largest city is continuing to foster a growing share of the nation’s jobs, particularly in high-skilled, high-paying fields. Already contributing 51 per cent of Toronto’s GDP and 33 per cent of the city’s jobs on just 3 per cent of its land area, downtown employs some 500,000 people, a number that the city’s planning department estimates could almost double by 2041.
That fits a pattern too. Geographic inequality is on the rise, with the unequal distribution of wealth increasingly expressed through land; economic inequality also means spatial inequality. As a case in point, a recent study by Rutgers University calculates Manhattan’s land area to now be worth as much as Canada’s entire US$1.74 trillion GDP. While frenzied real estate speculation may be responsible for part of that staggering sum, the growing concentration of knowledge-based jobs in the central business districts of select global cities like New York, London, Los Angeles, and Toronto reveals a more fundamental economic reality. In Toronto, the Tim Hortons relocation follows recent moves downtown by Coca-Cola, Ebay, and Google, while large professional services firms like Deloitte, PWC, and KPMG have similarly consolidated more regional operations in the core.
Ever since the 1970s, the Greater Toronto Area has gradually tightened its grip as Canada’s dominant economic hub, a fact now symbolically underlined by the city’s booming downtown skyline. Boasting ample cultural amenities and a walkable, reasonably transit-friendly urban core, downtown Toronto bears the hallmarks of 21st century economic success, exemplifying the urban “quality of place” that’s extolled as a key factor in attracting the sort of talent pool now chased by Tim Hortons, et al. But the Toronto region also boasts the country’s second largest employment zone, and its success tells a very different kind of story.
Secondary Cities in First Place?
Beating out the central business districts of Vancouver, Montréal, and Calgary, the lands surrounding Pearson International Airport were identified in the Neptis Foundation’s 2015 Planning for Prosperity study as Canada’s second largest employment zone. Yet, while quietly providing over 300,000 jobs, the airport “megazone” — which includes parts of Mississauga and Brampton, as well as a sliver of Toronto — doesn’t look or feel much like the downtown of a major city.
At first blush, the area’s success runs contrary to the predominant narrative of 21st century urbanization and economic clustering. Offering neither palpable density nor higher-order transit, expanses of surface parking belie a vibrant economic hub. In 2018, views from the airport are still met by tangles of elevated expressways and smatterings of low-slung warehouse typologies, punctuated only intermittently by pockets of commercial density. So what gives?
For starters, the population. Downtown Toronto’s construction cranes epitomize the rise of one of North America’s fastest-growing urban regions, but the majority of the GTA’s population is increasingly found in surrounding 905 municipalities like Vaughan, Mississauga, Whitby, and Brampton. 2016 census data records a population of 2,731,571 in the City of Toronto, which makes up approximately 43 per cent of the GTA’s 6,417,516 residents, and well under a third of the larger Golden Horseshoe’s population of nearly 10 million. And the gap is only getting wider.
Though tropes of city-dwelling millennials may have supplanted the late 20th century’s narratives of white flight and urban decay, it’s suburbs that continue to drive growth. In 2011, census data showed that Toronto’s population of 2,615,060 made up nearly 47 per cent of the GTA’s 5,583,064 inhabitants. In 2006, Toronto constituted 49 per cent of the GTA, while contributing over half of the GTA’s population at the turn of the millennium.
For much of the past decade, Toronto led North America in the volume of high-rise construction, surpassing even New York City according to Emporis’ 2012-2014 data. All those glassy skyscrapers signal rapid growth, but they don’t necessarily manifest it. To be sure, density is skyrocketing in parts of the city, but the continued predominance of single-family zoning leaves most of Toronto’s land area out of that equation. Sharply rising housing costs — which may be exacerbated by the city’s refusal to liberalize zoning — also put living in Toronto out of reach for many. Toronto continues to grow overall, yet fine-grained census data shows either stagnation or decline of population across approximately 70 per cent of the city’s land area, with the severe paucity of attainable family housing reflected in the Toronto District School Board’s steadily declining enrolment.
By contrast, affordability problems across the 905 have yet to reach Toronto levels, and the somewhat more even patterns of intensification allow for greater population growth. Economic prosperity isn’t a mere a corollary of population, however, and the clustering of employment around Pearson airport is also rooted in more complex economic factors.
When analyzing the workforce, economists divide jobs into categories of local “population-related” employment and transferable “core” employment. Demand for some jobs is driven entirely by proximity to population — basic services like grocery stores, doctor’s offices, barbershops and banks are necessities in most communities. These population-related jobs are contingent on serving the people who live near them. Transferable core employment is not. The corporate offices of financial services, tech companies, and consulting firms don’t serve the population that immediately surrounds them. Put bluntly, Amazon can choose to put its second ‘HQ2’ headquarters wherever it wants, or more acutely, wherever it finds the right workforce (and, in all likelihood, the right tax breaks).
As in downtown Toronto, the overwhelming majority of jobs that surround Pearson airport aren’t butchers and bakers. In fact, 83 per cent of jobs in the airport megazone constitute core employment, according to the Neptis Foundation. The local economy is now largely shaped by knowledge-intensive occupations, featuring clusters of professional services — including some banking and consulting —broadly similar to those found in downtown Toronto. In other words, the professionals working near the airport aren’t just there because they live nearby; it’s because their employers have chosen to locate there. But why did they?
At a theoretical level, John Kasarda and Greg Lindsay’s “aerotropolis” model of economic development offers an answer. Outlined in a 2011 book of the same name, the theory posits that airports serve as key catalysts of 21st century prosperity. Much as the seaport, railroad, and automobile transformed mobility and the ‘spatial fix’ of cities in the 18th, 19th, and 20th centuries respectively, Kasarda and Lindsay argue that the global connections provided by major international airports now drive the global economy. As urban theorist Richard Florida wrote in Citylab, “Airports play a substantial role on the economic growth and development of cities and regions. In today’s knowledge economy, far and away, the most precious cargo they move is people.”
More tangibly, Amazon’s Request for Proposals to governments and economic developments for HQ2 hinted at the economic importance of airports. A prominent requirement for bids was the proximity of a major international airport, with a strong preference for direct flights to New York, San Francisco, Seattle, and Washington D.C. In assessing the 20 HQ2 finalists — including Toronto – CityLab cited Atlanta and Austin’s airports as the primary draws and drawbacks to the respective bids, underlining the value of connectivity.
At Pearson, the economic impacts are impressive. The airport itself directly employs some 49,000 people, while handling a record 47.1 million passengers in 2017, according to the Greater Toronto Airport Authority (GTAA). Taking into account indirect economic spillovers, the airport’s impact is even more astounding. As Florida recently explained, “Toronto Pearson generates more than $40 billion annually, which equates to about 15 per cent of the GTA’s total economic output.”
In an open letter, GTAA President and CEO Howard Eng stressed that “it’s the stories behind the numbers that reveal our true impact: The multinational companies that build their Canadian headquarters in our region, confident of having easy connections to the world. The flow of foreign investment into local enterprises that require similar connectivity. The startups and growing ventures in various innovation centres across Southern Ontario – all dependent on global links to secure financing, arrange manufacturing and explore potential markets.”
Towards Transit-Oriented Growth
If Pearson’s waxing economic importance signals a bright future, its immediate surroundings reflect the past. Situated at the confluence of five major highways, including Highway 401, the continent’s busiest, the airport is at the heart of one of the most congested urban regions in North America.
According to the Neptis Foundation’s Marcy Burchfield, 22 per cent of all work trips in the Greater Toronto and Hamilton Area (GTHA) are made to the airport megazone, with employees coming from both the 416 and the 905. However, with no higher-order transit available at the airport, the overwhelming majority of those trips happen by car. It only takes a few minutes of sitting in 401 traffic to see the inefficiency of that.
Speaking at a recent Urban Land Institute (ULI) panel discussion, Burchfield noted that “about 90 per cent of trips are made by car” to the airport zone and the much smaller — but rapidly growing — employment zones in Vaughan and Markham. Citing 2011’s Transportation Tomorrow study, Mckinsey’s David Munroe added that the bulk of daily commuters from the western GTHA (including Peel, Halton, and Hamilton) do not stream into downtown Toronto. The nearer airport zone is the significantly bigger draw, while a considerable number of commuters continue along the GTA’s ‘northern arc’ to Vaughan and Markham. Given the scope of employment at the airport zone, the volume of commuters, and the economic costs of congestion, the case for higher-order transit is relatively straightforward.
In 2018, views from the airport are still met by tangles of elevated expressways and low-slung warehouse typologies, punctuated only intermittently by pockets of commercial density.
Looking to the future, the GTAA has gradually advanced plans to bring a transit hub to Pearson airport. In 2016, the agency released the Pearson Connects: A Multi-Modal Platform for Prosperity report, co-published with leading planning firm Urban Strategies. Warning that “traffic congestions is reaching critical levels,” the report makes the case for a multi-modal transit hub, integrating various regional services — including the recently completed Union Pearson Express (UPX) — into a facility notionally dubbed ‘Union Station West.’ Considering the growing employment and population, the airport is a logical place for such a hub, which could effectively knit together a range of modes and services into a more efficient network, while solving the ‘last mile problem’ for thousands of commuters.
Compared to other major international airports like Amsterdam Schipol, Hong Kong International, and London Heathrow, Pearson lags embarrassingly in terms of transit mode share for passengers, and the same is true for the airport zone’s employees. Only eight per cent of Pearson’s passengers arrived by transit in 2016, compared to 39 per cent in Amsterdam and 63 per cent in Hong Kong.
This year, plans for the multi-modal hub took a major step forward when the GTAA announced a partnership with regional transit authority Metrolinx to cooperate on enhancing transit access. Meanwhile, the outgoing Wynne government promised high-speed rail service to Kitchener and London via Pearson, environmental assessments for electrification of the Kitchener Line, and a bypass for freight trains in Brampton. For its part, the GTAA also released an updated 20-year Master Plan, identifying an Airport Road site for the new transit hub.
Given Pearson’s economic dynamism, can the airport eventually rival downtown Toronto as Canada’s largest economic driver? Probably not. Even if the economic relationship between downtown and the airport zone has competitive elements, the two are fundamentally symbiotic. A vibrant downtown requires a major airport, just as a major airport is predicated on proximity to a large urban centre. While the airport zone has proven a massive employment hub, downtown Toronto possesses a rich urban fabric that remains the much bigger draw. In simple terms, it’s why Canada’s largest companies are also willing to pay the country’s highest commercial rents.
Yet for all the stark differences between Canada’s two biggest employment zones, they jointly illustrate the lingering power of geography in the 21st century. After all, why would airports matter if being there didn’t? Despite the rise of remote work and the internet’s promise to ‘flatten’ the world, the economic power of clustering has not only prevailed but intensified. Geography, like wealth, has become more stratified. Channelled by the jet engine and the fibre optic cable, the future still beckons with greater global connectivity and access. If only for a lucky few.