A great cover story in The Coast this week!
Downtown's missing buildings
City Council's rejection of the Waterside Centre is getting a lot of attention. But the real story of Halifax development involves lots of plans that have been approved--where re all those skyscrapers? And can we build a decent city without them?
by Tim Bousquet
write the author
There is a Parallel Halifax occupying the exact same space and time as our Halifax, just a couple of random quantum events removed. This other Halifax has the same crappy weather, the same annoying classic rock radio stations, the same sad dearth of Mexican restaurants. As you slip across the dimensions---through, say, a momentary disruption in the time-space continuum as you ride the bus across the Macdonald Bridge---you won't even know you are in Parallel Halifax. Until, that is, you arrive downtown.
As you get off the bus at Scotia Square, you look across Barrington Street to the Delta Barrington Hotel and notice the same kilt-clad valet parkers that have always amused you.
But then your eye is pulled north and you catch a glimpse of something unexpected: a massive building abutting the hotel and occupying the entire triangular piece of land between the back side of the Granville Mall and Barrington and Hollis streets. In Our Halifax there is merely a parking lot; in Parallel Halifax, however, a shiny steel-and-glass structure rises 30 storeys above you.
A purposeful rush of business people streams into and out of the building; other, lingering groups crowd coffee shops and sidewalk cafes that flank the entrance. A large, digital stock ticker on the side of the building suggests that a financial firm occupies most of the building.
You walk south on Barrington to Sackville Street, turn left and, whoa! There before you, a block down, are two shimmering and twisting 27-storey towers, a thumb in the eye to the conventionally bland architecture that defines Our Halifax.
As you approach the first building you pass tour buses, limousines and taxis dropping off and picking up travellers, a scene of controlled chaos that is duplicated in the hotel lobby with concierges, bellhops and clerks running this way and that. You walk through and see lots of urban hip 20-somethings milling about, residents in the second tower, a condo project that must have spectacular views of the harbour.
You exit to Hollis Street, and head down the hill on Salter. Here's another condo building, a 12-storey structure. The residents appear to be slightly older than the folks up the hill---they're in their 30s and 40s, more prosperous looking, clearly of the business class. Their building is unremarkable, but that's a good thing, you think; it doesn't overwhelm the waterfront.
But as you round the corner onto the boardwalk, you're confronted with yet another unexpected site---a five-storey building with a wave-like facade facing the water. Because of its relatively low height, it forms a nice step up to the condo behind it and onto the gigantic towers up on Hollis. This building, too, is a hotel, and tourists pour out of it, joining the teeming crowds on the boardwalk. You like the overall effect.
You walk back inland and a half-block south. Keith's Brewery has had a make-over---the historic Keith's Hall has a new roof, a storey higher than you remember, and there's a new five-storey building back behind, facing Hollis Street.
The real surprise, however, is the 21-storey building at the corner of Bishop Street. Its facade is much too busy for your tastes, the clashing concrete panelling and brick reminding you of the painful faux historicism of colonial American towns. The architect has over compensated with a tapering effect reminiscent of 1920s New York, but only on the water side---the Hollis Street facade is a sheer wall, extending 200 feet straight up. In all, the building is a complicated mess of styles and designs.
But everyone has their own tastes, and evidently lots of people like this building; as with the other condo projects, plenty of residents are coming and going. You figure they are uniformly 30 years old, straight out of graduate school and into their first jobs.
Proposed Brewery Market development
Let's suspend our tour of Parallel Halifax for a moment and consider: which quantum events separate Parallel Halifax from Our Halifax? How is it that these busy buildings were built in the other universe, but not in the one we know?
We can rule out two causes immediately. First, an "anti-growth" city council had nothing to do with it. There might be some other Halifax out there, a Perpendicular Halifax with palm trees lining the streets, three-headed dogs fetching tennis balls on the Common and politicians committed to preventing anyone from building anything, ever, but that's certainly not Our Halifax.
In Our Halifax, city council approved each of the developments that were actually built in Parallel Halifax. Way back in 1978, the old City of Halifax gave its blessing to Empire Corporation (Sobeys) to build up to 600,000 square feet of office space on the triangle lands. In 2006, HRM council gave easy approval for the 12-storey condo project and five-storey hotel on the waterfront. As for the two futuristic towers on Hollis, the concept would have never existed in the first place had not the city asked developers to come forward with proposals for what to do with the city-owned site, and after United Gulf was awarded the contract for its "Twisted Sisters" development, council approved it. Earlier this year, council also approved the three buildings comprising the Keith's project on a 22-1 vote.
Perhaps, then, what separates the two realities is the presence of an obstructionist heritage preservation group in Our Halifax. To be sure, the folks at Heritage Trust are dedicated, but they're not unthinking obstructionists; they actually came out in support of the Salter Block development---the condo and hotel on the waterfront.
True, Heritage Trust opposed both the Twisted Sisters and Keith's developments, but it didn't much matter. Twisted Sisters was appealed to the provincial Utility and Review Board, which found the city had acted properly in approving the project. The Keith's approval has not been appealed.
So, neither political nor heritage considerations explain why the eight buildings haven't been built in Our Halifax. As far as political and legal issues go, developers can rev up the bulldozers and cranes today. Nothing's stopping them. And nothing's been stopping them, in one case (Empire) for 30 years, in others (Twisted Sisters and Salter Block) for two years.
So why do developers actually construct buildings on the other side of the cosmic divide but leave them unbuilt here in our universe?
"The big challenge here in Halifax is that unlike Calgary, or Toronto or elsewhere, we don't have a lot of head offices for major companies," says Ross Cantwell, a real estate analyst with Colliers International, a firm recently hired by the city to study demand for office space throughout HRM.
"Developers try to minimize risk," he continues. "You don't just throw up an office building and hope that somebody shows up. First of all, the banks won't give you the money---they wouldn't do it a year ago, and certainly after the last three to four months there's no way in heck they're going to give you a loan unless you can show you've got good-quality tenants who are going to lease space for some reasonable period of time."
Even the largest tenants downtown---Cantwell says there are "10 or 12...you can count them: There's a couple of big law firms downtown, Nova Scotia Power, go through the list"---use only about 50,000 square feet each, and the average office downtown is merely 3,000 square feet.
"To pre-lease a 250,000 square foot tower, you're going to need commitments on 180,000 square feet. You have to assemble all the tenants in a market where you don't have a lot of large tenants, you have to get them to agree to lease rates that are going to make sense two years from now, so they have to include inflation."
The bottom line is that new construction costs won't be covered by rent. "You need about $28 dollars a square foot, plus your operating costs, to support new construction downtown. You might need close to $40 a square foot to make it work."
By contrast, Purdy's Wharf---opened in 1989 as the last large office building built downtown---is renting at about $20 a square foot, plus operating costs.
Cantwell's view is shared by Mike Turner, an analyst who studies rental demand in Atlantic Canada for the federal government. "There's definitely a problem between the rents that people are willing to pay today, in terms of demand, and what rents are required to economically construct a building," says Turner.
Turner's firm was hired by HRM to produce a second rental space study, specific to downtown, of "capacity and demand." He is to give five-, 10- and 25-year projections for what will likely be the demand for five different types of buildings---office, residential, retail, hotel and institutional (primarily, governmental)---and compare that to the likely availability of that space over the same period.
While he declines to speak about the study's conclusions before its publication next week, Turner is happy to discuss the broad issues covered by the report.
As Turner explains it, there was plenty of unleased, available office space in the early 1980s. But as the decade proceeded, the vacancy rate fell to six percent. That was enough to get developers to start paying attention---they began buying land and hiring architects. But it was only when the vacancy rate hit four percent and rents soared by as much as 40 percent a year that developers started to actually construct new buildings.
Right now, even though the downtown vacancy rate is below four percent, there's been no corresponding increase in rent. With vacancy rates plummeting, shouldn't rents be going up, creating the demand that gives incentive to developers to start constructing buildings?
Well, it used to work that way, but not anymore, say both Cantwell and Turner.
Ask Cantwell what is happening downtown today and he'll first give you a lesson in the evolution of cityscapes since the introduction of the automobile. He comes from a different place politically, but Cantwell's historical understanding of suburbanization is almost exactly that of anti-suburbia theorist James Kunstler.
But suburbia is a reality of the modern world, and as Cantwell explains, most companies will locate new offices in the suburbs, where they have low construction costs, pre-approved zoning in business parks, ready access to highways and the airport and, most importantly, are in close proximity to where their employees live.
Turner gives that analysis its local dimension. "Downtown Halifax was overbuilding in the '80s, and then the recession hit in the early '90s and we saw a collapse in the market, a collapse we haven't recovered from," he says. "Businesses have other opportunities---Burnside, Bayers Lake---which were not so available in the '80s."
Also, Turner adds, downtown office space used to fetch a premium rent of about 25 percent---business owners would pay more because they thought having a downtown location increased their prestige.
"That [premium] disappeared in the 1990 recession because everybody got religion---they now have a more Calvinistic approach to rent. People focus on costs. Couple that with an increase in telecommunication---you can stick all your back office operations in the City of Lakes or Bayers Lake business parks, and control your costs."
Proposed Twisted Sisters development
There's an idea that we can break through the low-rent stagnation downtown by attracting large international financial firms to Halifax. Mayor Peter Kelly has discussed the need for two-million square feet of office space to house an additional 10,000 workers, sentiments echoed by premier Rodney MacDonald.
That's a Possible Future Halifax that might somehow converge with the Parallel Halifax, assuming the quantum events line up in the right order, on schedule with the politicians' talking points. To that end, the province's business development agency, Nova Scotia Business Inc., is tasked with attracting large employers to town, and to hear them tell it, they're having great success.
"We've created thousands of jobs for downtown, that's what's really driving downtown Halifax these days," says Stephen Lund, NSBI president. "On financial services, alone, we've had a lot of success---probably more success than pretty much any other jurisdiction in the world the last couple of years."
Asked to quantify that success, Lund mentions Butterfield Fund Services and Citco Fund Services, two hedge funds that have located some operations in Halifax in return for provincial payroll tax rebates. In 2006, an NSBI press release said Butterfield would "create up to 400 full and part-time jobs over the next seven years" and a press release earlier this year claimed Citco would create "up to 325 new jobs over the next six years."
"We expect this sector to grow with the commitments we have to date from about 1,200 to 1,500 employees," says Lund. "We've got several thousand jobs that we expect to be here, just from the companies we're already working with."
It's difficult, however, to pin those announced jobs down. Certainly, NSBI has had success with large firms coming to Halifax---RIM brought its operations to Hammonds Plains and several aerospace firms have located at the airport----but how many financial service jobs have actually been, or will be, created downtown, as opposed to out in a suburban office park? Mike Turner, for one, can't seem to get a straight answer.
To produce his detailed study of office demand downtown, Turner needs exact numbers for the number of workers Lund says he's bringing to town---not just promises on a press release, but actual employees bringing home actual paycheques.
"Let me tell you where we are with respect to Nova Scotia Business Inc. and the people they say they have that are waiting to move into the downtown, who can't move in for lack of space," says Turner. "We have attempted to conduct Mr. Lund on two occasions, and he's obviously very busy, because he doesn't respond. So we sent him a letter asking if he would list the companies that are already here and that he anticipates coming here, and the number of jobs that they have created so far, and that they anticipate in creating over the next five years."
"[Turner] wants to know the names of companies coming here," acknowledges Lund. "He's smarter than that, to ask that question. You think we'd tell anyone who we're talking to? That's just about the dumbest thing you'd ever do. We can talk about companies we know for sure that are here or are coming. But the problem is, that with this economic turmoil, nobody knows what it's going to look like."
Well, yeah, that is the problem. Anyone waiting for Halifax to be overrun with hedge fund managers obviously hasn't been paying attention to the daily news, or to their own stock portfolio.
With no response from Lund, Turner's employees are left checking press releases, looking for clues on website postings and calling local developers and landlords to see if they've been approached about rentals for financial firms.
Does Turner think the idea that Halifax can anytime soon become a booming financial centre is oversold? "I certainly get a sense of it," he answers. "But I think it would be premature to talk about it."
A skeptic might think this particular Possible Future Halifax an elusive one, unreachable from Our Halifax, at least for the next decade or so.
The Trillium on South Park Street.
Of course, the recession will sooner or later come to an end and so Halifax might be able to position itself to take advantage of the rebound. Can't we simply prop up a bunch of skyscrapers and watch as financial firms show up to fill them up---the "build it and they will come" model?
Unfortunately, no. Rather---and on this point every one of the dozen people interviewed for this article agrees---it works the other way around: We educate a large workforce and convince them to stay in Halifax and the firms will follow, attracted by competent and (let's face it) relatively inexpensive workers. Workers bring firms, firms increase rents, higher rents inspire developers to build buildings.
So, how do we convince educated young people to stay in town? Hold that thought while we revisit Parallel Halifax.
As you walk around the place, you start noticing that some of the buildings---the condos---have an odd pulsing character about them. They are, you realize, caught, mid-pulse, in a phase shift, shuttling between Our Halifax and Parallel Halifax.
When you look closer you realize that it's not the structures themselves that are having trouble finding temporal stability, but rather the people in the buildings, the residents. One second they are young workers, the next second they are older, retired people. Back and forth they flash.
The condo residents can't find equilibrium because they are shifting between three different universes. In Parallel Halifax and Possible Future Halifax they are young---remember the hip 20 and 30 year olds? But in Our Halifax, condo residents are different people entirely.
Explains Mike Turner, the analyst hired to study downtown: "With the condominiums, not entirely, of course, but if you want to build a profile---it'd be over-55 empty nesters who don't want to move from the area---80 percent of them actually live on the peninsula, own homes on the peninsula, so they release cash from selling their homes and buy condos."
Got that? Those aren't young working people moving into those condos. The boom in condo building over the last few years has been driven by retirees, cashing out their retirement funds and selling their houses in the south and west end. Alas, very, very few young working people can afford to buy the houses the retirees are leaving behind---those are for middle managers and the like in their 40s. Young people are simply priced out of the whole deal; they can live in Bedford or Dartmouth, which, incidentally, is where the business parks are that are seeing all the new office construction.
The missing buildings
The Empire Company was, in 1978, awarded development rights for a building as large as 600,000 square feet on the "triangle land" adjacent to Delta Barrington Hotel. Earlier this year Empire announced that it will build a 22-storey tower with 450,000 square feet of office space, but no work has begun.
In 2007, the Utility and Review Board rejected an appeal in opposition to this project, which envisions two 27-storey towers with 700,000 square feet of space split between hotel, condos and retail uses. No work has begun.
This summer, Halifax council approved a re-development of the Keith's Brewery property. The project includes three buildings---a reconstruction of the existing Keith's Hall, a new five-storey condo and a 21-storey tower with 110 residential units and ground-floor retail. No work has begun.
Halifax council approved the Salter Block development in June, 2006. It calls for a five-storey hotel on the waterfront, with a 12-storey condo project on Water Street. No work has begun.
Oh, and don't forget: Those people approaching retirement age just saw a third of their retirement funds disappear in the global financial collapse, poof, into thin air. Gone. What that means for condo development is anyone's guess.
This is, no doubt, an oversimplified read of Halifax. By concentrating only on very large office buildings we're missing an important part of the development picture---smaller buildings that can be built by companies that don't need to borrow from a bank to pay for construction.
Some argue that the controversial Waterside Centre proposal that was voted down by Halifax council is exactly the sort of project that might work in our tight office rental market. Waterside was to be nine storeys and 80,000 square feet, a large but not overwhelming space to rent. "I'm not worried about it," developer Ben McCrea told council when asked about the rental potential of Waterside.
Developers also complain that the city's planning process is needlessly complex and that the bureaucracy is difficult to navigate. And while heritage advocates haven't had much success in derailing the large developments, builders are clearly, and understandably, vexed by what can seem like petty interference from the city's heritage advisory committee. Ross Cantwell, for example, speaks of a long battle over the colour of roofing tiles for a historic building he used to own on Maitland Street.
These concerns are legitimate, but let's not overstate them. Developers the world over complain about processing times and bureaucracy; like retailers complaining about sales taxes or bar owners complaining about smoking bans, it's what they do.
That's not to discount their arguments. The trick is to take them seriously alongside the sometimes competing social demands that government is also charged with managing. It can be a difficult balance, but in Halifax the scales are clearly tipping back in the developers' favour.
In February city staff prepared a report showing that the bureaucracy does indeed move a bit slower in Halifax than in similarly sized cities in Canada---it takes eight months locally to process a development agreement, compared to six months in Quebec City and seven months in St. John's. Staff recommended a series of steps to streamline the process to bring processing times down, and council approved those changes.
More significant, once the HRM by Design planning process is adopted, builders will essentially leap past much of the bureaucracy. Several years in the making, HRM by Design consolidates much of the Halifax planning code, takes approval power away from the council and gives it to a small, unelected committee dominated by city planners and business reps. It also severely limits the right of the public to appeal approvals. HRM by Design will likely be implemented in the spring.
The site of the Waterside Centre proposal was specifically exempted from the HRM by Design process because McCrea had already submitted his development application by the time HRM by Design was being forged. But what would have happened had the application come in next year, after HRM by Design is adopted?
"Of all the suite of aspirations and objectives that HRM by Design sets, Waterside Centre was aligned very closely with nearly all of them," says Andy Fillmore, manager of HRM by Design. Still, while HRM by Design avoided dealing with height limits for the Waterside site, Fillmore acknowledges that Waterside's 117-foot elevation exceeds the 70-foot height limit placed on the surrounding properties.
The Waterside site aside, every other piece of property downtown is covered by HRM by Design guidelines, and so once it is implemented, developers will be permitted to build any building that fits in the guidelines.
Proposed Waterside Centre development
We can get more office space downtown without building gigantic new skyscrapers.
Take, for example, all the provincial and city offices. Cantwell underscores the importance of maintaining government's legal, finance and regulatory offices downtown, because large private businesses tend to congregate around those government offices. But in his report on office space in HRM, he argues that other government employees, like clerical workers in the Department of Education, could be relocated to the suburban office parks. About 50,000 square feet of downtown space would be freed up, which could be used as temporary space for financial services firms.
(Likewise, Nova Scotia Power and Emera propose to move their headquarters from one of the Scotia Square towers to the old power plant on the waterfront, freeing up another 100,000 square feet of space.)
Empty government-owned land can also be developed. The Waterfront Development Corporation, for example, proposed vastly expanding the Maritime Museum. Developers were asked to submit ideas for how to build on the land, and the winning submission came from no other than Ben McCrea's Armour Group, which proposes to build the museum expansion, a small office building and yet another hotel on the site.
One obstacle to the museum development plan was the BioScience Centre, occupying land to the north of the museum. That problem was solved last month, however, when premier Rodney MacDonald committed the province to paying $1.6 million a year for the next 20 years to move the BioScience Centre into an expanded operation on the Dalhousie University campus. As a result, McCrea's project can move forward.
Still, even if some government space might get freed up, or if a few small buildings might get built here and there by a self-financing builder like McCrea, the underlying economic reality remains---any major growth of downtown Halifax will remain elusive.
And that reality won't change at least until the recession runs its course and Halifax does a better job of attracting and maintaining a young, educated work force that can afford to live downtown, which in turn attracts the companies looking to employ them.
"Fundamentally, what's going to drive it is the availability of labour," says Cantwell. "So it comes down to: One, do the educational institutions in this city have a plan in place to produce the graduates these companies need? And two, is city council working to make this a great place to live?
"How do you do that? Great parks and open spaces, we've got a fantastic waterfront, it'd be great if you could go rollerblading somewhere---I mean, you work on those kinds of things to make it a great city, and then we'll retain more of the people who come here to go to university and we'll attract more people to live here instead of going elsewhere, and then the employment will follow."
Cantwell's list sounds a lot like the "vibrant city" rhetoric used to sell HRM by Design or, for that matter, by any politician who has ever run for office. That's not a bad thing---we're talking, basically, about good government---but it misses an important consideration: affordability.
Enrolment is dropping at local universities for lots of reasons, but the fact that Nova Scotia has among the highest tuition rates in the country must be one of them. And high tuition means big student loans, which in turn means local graduates leave town to look for high-paying jobs out west in order to pay off their debts. If premier MacDonald and the provincial government are serious about their plans for downtown, the first order of business will be to slash tuition rates.
Even if young people do come to live in Halifax, so long as rents on the peninsula are sky-high, increasingly they'll be living out in the suburbs; and if that's the case, companies that move to town will locate their offices out in the suburban office parks, close to their employees, not downtown. If council wants young people living downtown, it'll have to impose affordability requirements on new condo and apartment development.
Whatever one's opinion on development, trying to build a vibrant, livable and affordable city---having a government that is responsive to citizens' needs, concerned foremost with quality of life, promotes cultural institutions, devoted to broad access to education and environmental quality---can only be a good thing.
A vibrant city, by the way, is one where an educated citizenry is engaged politically, and where residents argue and disagree about what their city looks like, how it's run and, yes, where and how new buildings are built. If we have true good government, development issues will not be settled in a back room, but in the letters pages of newspapers, on talk shows and in the chambers of city council.
Maybe good government leads to Parallel Halifax, or to Possible Future Halifax or even, somehow, to Perpendicular Halifax with its three-headed dogs.
Or maybe not. Maybe the recession will slide into a 20-year Depression and the residents of Dystopia Halifax will have more pressing things to worry about than downtown development. But even then, creating and insisting on good government is the right course of action.
Maybe we should stop getting so worked up about finding big buildings and concentrate instead on making this a nice place to live.