Jasper Ave Blues: What Does $5 Billion Get You These Days?

In Edmonton, the Downtown Business Association released a new report about potential downtown investment. It outlines 36 projects that are approved, proposed, or rumoured to be occurring downtown or in the adjacent Quarters area. Most readers will recognize that not all of these will go ahead – some will be shelved indefinitely, if not permanently and some will be scaled back. Yet, it paints a picture of what downtown might become, maybe not in 5 years (as the report suggests), but perhaps in 15-20.

I’ve grouped the probable, proposed, and rumoured projects into five categories: Commercial (office, retail, service), Residential, Major Facilities, Infrastructure, Public Space:

Commercial
This is the most problematic section. It proposes nearly 3.9 million square feet in commercial space (office, retail, and service), which seems…really high. For example, a City-commissioned report from 2009 anticipated that downtown would need an additional 3 million square feet in 2044, using baseline growth projections. In an alternative, and more positive, scenario, it projects demand to be about 4.5 million by 2044. All these projects going ahead would mean more than 85% of that would be available 5 years from now. This doesn’t add up, especially when – as our Mayor correctly points out – many businesses still don’t want to locate downtown.

(Update: DECL President Chris Buyze is more bullish on the commercial real estate market than I am. At this point, we have to agree to disagree, but he provided this Colliers report in support of greater growth).

Residential
In total, it proposes 2284 units, in addition to however many the Warehouse Incentive Program would contribute towards. Using the $10,000 per unit number from the Capital City Downtown Plan, that would mean an additional 1200 units for a total of 3484, which could translate to more than 5000 additional residents in five years (assuming roughly 1.5 residents per unit). Given that downtown grew roughly 130% in 15 years, growth of close to 40% in 5 years isn’t completely implausible. Note too that the region’s population grew by 124,924 residents from 2006 to 2011, and you can see demand for housing continuing to grow so long as the economy performs well.

Yet, the biggest threat to residential development downtown probably comes from its neighbours. Projects in Oliver continue to move ahead, drawing from much of the same pool of potential residents. Development on the City Centre Airport lands is also likely to start, providing further competition. For development in all three areas to go ahead as planned in the short term, Edmonton likely needs a huge economic boom, or a meaningful reversal of growth in the suburbs.

(Update: Buyze says the 10K grant isn’t happening. Not sure what the money will be spent on, but I can’t see this positively impacting my unit projections).

Major Facilities
The arena will go ahead, as will the Royal Alberta Museum. Based on estimated attendance, let’s say the arena will bring roughly 1,800,000 visitors; based on data from the early 2000s and accounting for growth, let’s give RAM 260,000 (if you think those are impressive, downtown Edmonton’s workforce would account for between 14,000,000 and 15,000,000 just by going to work regularly). In any case, all sorts of caveats apply when considering impact, such as that many attendees will go straight from the train or bus or their car to the venue and back, and many who do go out before or after an event already do so in the downtown area. The rest of the venues are still too much in the project phase to project well.

Infrastructure
The changes to Jasper Ave and completion of Capital Boulevard will help with beautification. The proposed enhancements are all welcome, though dependent on CRL revenue, which wouldn’t begin to be collected until at least 2015 – assuming the arena goes ahead that year and ancillary taxable development is build at the same time.

Public Space
What I said about the proposed infrastructure projects applies here as well.

What It Means for Downtown
All these projects added up provide a window into a possible future for downtown. Yet, it’s by no means assured, and not the only possibility. Many of these plans are just that – plans, with no money attached. Others are just ideas at this point. It’s likely that civic plans will once again be updated before all of these projects (or replacements) go ahead, meaning priorities may shift, if the market hasn’t led a shift already.

Citizens have to think about what kind of downtown they want, and whether what’s being proposed meets that vision. In particular, because it’s estimated that at least $2 billion of this investment (including $1.5 billion of what’s probable) will come from public funds.

For me, I see many projects I like in the report (additional residences, parks, cycling and walking infrastructure). But I also see things that are missing, such as no mention of the LRT (the downtown portion connecting the West and Southeast legs of the unfunded new line).

I will continue to hammer the point about opportunity cost, and it needs to be said again here. In particular when dealing with the public investment side, we need to consider what the money can best be spent on in order to achieve the social, financial, and development returns we hope for. I hope citizens keep that in mind when reading this report and others like it.

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