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Posted: Monday, April 12, 2010
By: Paul R. Bennett, Vice President & Broker, a licensed Broker with Colliers Ottawa, focusing in Office Leasing & Sales. |
A city’s land supply is a non-renewable resource. Once built, commercial land is effectively removed from future inventory. It may not be re-used again for generations, if at all. Downtown property is even more valuable a resource because it carries the heavy lifting in taxes without disrobing us of space. City Centres typically comprise 2% of urban area yet accommodate half its taxable office space; a financial equation fundamental to city prosperity.
Ottawa’s practical business core is among the smallest of major cities in North America and low density development has been consuming it faster than comparable cities like Memphis or Edmonton that have more capacity for commercial development. Ottawa has been discouraging high buildings for decades, which is frightening because this practice has been wasting our land supply like water running from an unattended garden hose.
Density is a cost efficient tool. It enables capital infrastructure and public transit to be spread over less geography requiring proportionately fewer public resources to manage and maintain. Calgary has 35 million square feet of office space in its downtown. In the same sized area, Ottawa has only half that floor volume not counting Parliament Hill and other not-for-lease public buildings. In fact, Ottawa’s unused land cannot realize in future capacity what Calgary has already built without spreading out to surrounding sites! Not one of Ottawa’s remaining core properties has capacity for even 600,000 square feet which is modest by even our low density standards.
Ottawa’s abuse of its taxable land was witnessed firsthand at World Exchange Plaza (WEP). This prized commercial site was the target of building height limitations when it was conceived in the 1980s. The City thoughtfully imposed an open plaza in the development agreement which is ordinarily a design element embraced by builders. Higher buildings enable these open spaces which make a development more appealing to pedestrians and tenants. Ottawa’s height restriction would allow none of that however. It would have forced the WEP developer to build the allowable floor space horizontally using the land for building structure instead of airy recreational concepts. To enable the open area to be constructed economically within its height restrictions the City’s bright idea was to down-zone WEP. This plan made the site’s permissible density smaller to fit beneath the height restriction. The city essentially vaporized a quarter of a million square feet of taxable floor space to permit an open space in the final design.
Both the land-supply and financial consequences of Ottawa’s smaller WEP today are devastating for taxpayers. The lost floor area alone is the equivalent of several land acres that may never be replaced. The lost tax revenues are even more astounding, being an annual tax loss near $3.5 million dollars for the vaporized floor space. That is a cumulative hit near $200 million dollars over the building’s life expectancy. Had the city increased floor capacity at WEP it might have added - not subtracted - $200 million dollars in tax revenue; a swing of $400 million in public revenues. This loss from one single block of land might have easily been recaptured by higher density without sacrificing the property’s signature open plaza in the final design.
Ottawa may be convincing residents that viewing the Peace Tower’s profile from a 45 degree angle off Macdonald Cartier Bridge, without high office buildings to obscure its silhouette, is an aesthetic ideal. But they neglect to inform, this ideal carries a multi-billion dollar tax loss from the city’s commercially assessed real estate downtown. The city also fails to inform us the absent floor space may have to be constructed in our back yards over time, to replace that lost taxable property.
Whether Ottawa confronts consequences imposed by low density planning or buries the problem for future generations, one thing is absolutely certain. Unless the city accommodates higher zoning or more land for commercial development, its head-in-the-sand planning is going to run the community head long into “taxing” problems long before the retirement years of its youngest residents. Ottawa’s inventory of commercial property is its most valuable non-renewable resource. Unfortunately, this resource and its taxable value is being zoned into virtual extinction in the name of naïvely conceived urban aesthetics.
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http://www.colliers.com/Corporate/
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