Meanwhile (leases), in Toronto

Almost everyone in Toronto recognizes the economic value of a strong, resident, creative industry work force.  And, almost anyone who thinks about it would agree that abundant and profitable commercial real estate is also critical to economic growth and prosperity.

In fact, the former contributes to the latter.  As creative industries flourish, they add to the demand for office, studio, and production space, which makes it more valuable.

It’s not reciprocal, however.   As commercial vacancies become more scarce, real estate prices escalate and early stage creative workers, or their fledgling companies, get priced out of the market. We can witness this happening in Vancouver right now.

Many leave for cheaper real estate in smaller cities and towns outside the GTA.  When this happens, Toronto’s economy and quality of life are tangibly and intangibly damaged.

It should be remembered that people who make things, like artists and related professionals, in a wide range of disciplines and industries, need more space than most of us.  Often their work space isn’t provided by an employer,  as with an office, factory, or retail worker.  They must find and equip space themselves, in addition to the place where they live when they’re not working.  Sometimes, work and home have to be combined to make ends meet, but to be clear, this is far from ideal in most cases.  Given that creative workers’ space needs are greater, and their incomes are lower than average, it’s easy to see how life in Canada’s second most expensive city becomes too difficult for them.

Spare no pity for the poor artist. There will always be poor artists. But pity us all if we fail to appreciate the contribution creative industries make to Toronto’s general prosperity.

What happens to an industry when a significant portion of its work force can’t afford to both live and work reasonably close to the marketplace of ideas and money they rely on to inspire and consume the products of their labour?  And what happens to Toronto when its capacity to create – in media, live performance, craft, design, publishing, and related enterprises such as fashion and architecture – is diminished by the erosion of its resident talent base?

Much more could be said about how escalating real estate prices can trigger the slow centrifuging of talent from Toronto into less costly markets outside the GTA.  Less is known about the attrition that results, as early and mid-career creatives are forced to leave their professions to take on better paid work.

These unpleasant truths hide in the shadows of glory.  Toronto constantly congratulates itself for its cultivation of creative industries, but rarely is thought given to how this economic boon could be made bigger and better, or have longevity.  Public policy tends to focus on what is, rather than what could be, and governments are rarely held to account for squandered opportunities.  Auditor generals usually reserve their criticism for losses, not for failures to gain. Yet, it must be possible to improve Toronto’s creative ecosystem, enhance creative industries’ capacity and competitiveness, and produce an even greater contribution to our economy.

One such opportunity exists in commercial real estate.

As each commercial building nears the end of its useful life, occupancy and lease rates decline.  There is a pause of varying lengths as the building transitions to its next stage.  Frequently, when rehabilitation, or demolition and redevelopment look probable, they go through a period of virtual dormancy.  These periods of reduced demand or complete vacancy can go on for years, as owners gamble on hold and wait strategies in hope that their properties will appreciate, or that limiting conditions such as zoning will change.  For some, an empty building provides a valuable business loss for tax purposes, and for others, their empty building may be part of a larger land parcel being assembled from multiple properties.

It’s not necessary to guess the strategy being pursued in every case.  It’s enough to know that there are systemic and structural reasons for the abundance of empty, older buildings all over Toronto, and that those that undergo rehabilitation, or demolition for redevelopment, will be replaced as other aging buildings enter their twilight years.

Stop and look around if you doubt this.  How many “For Lease” signs can you spot on older buildings that are obviously unoccupied in part or whole, and which would need massive investment to bring back to modern standards?  And ask yourself how long that sign has been in that darkened window?  You get the picture.

If these under-utilized buildings can be thought of as a resource or asset, and if the provision of affordable work space for creatives is a serious economic objective of the City, its agencies, and its allies, then there is clearly an opportunity presenting itself.  Instead of a non-reciprocal relationship in which creative industries contribute to, and suffer from, escalating commercial real estate costs, there is a chance to make these two important parts of the regional economy become more symbiotic.

NetGain has found two encouraging examples of ways to align these interests.  Neither is sufficient on its own, but together they offer a realistic hope of turning dormant commercial properties into hives of creative activity that benefit building owners, creative industry companies and workers, and contribute to Toronto’s economy.

First, is the existence of artist’s collectives.  These are self-organizing groups that form to achieve shared objectives, such as the acquisition and operation of expensive equipment, joint marketing or exhibiting initiatives, or the lease and management of shared work space.  Of these, the Akin Collective in Toronto's West End is the best suited to the creative activation of dormant commercial space.

Akin Collective has been in operation for eight years, has 150 members, 15,000 square feet of space under management, and a waiting list for studio rentals.  For building owners and realtors, it’s far preferable to deal with a single lessee, particularly one that is reliable and well-organized, than to deal directly with over a hundred individual artists and small groups.  Akin specializes in taking short term leases on old commercial buildings, performing superficial renovations to make them studio ready, and renting them out to like-minded creatives at rates they can afford.  It has also developed a non-profit wing that helps member artists advance their careers, build social and professional networks, and connect with the wider community.  If commercial realtors could be persuaded to unlock vacant space and turn on the lights, Akin would be the kind of organization they should lease to.

On the commercial realty side of this hypothetical bargain, there is the British example of “meanwhile leases.”  These are leases of dormant commercial space that accommodate non-profit lessees, at cost, in return for property tax or other considerations by the municipality.  In the U.K., non-profit users typically pay no rent, but must cover the cost of utilities and leasehold improvements.

“Meanwhile leases” are most commonly used to revive retail precincts during tough economic times (these really took off after the Recession of 2008), when stores go out of business and their windows get papered over.  It’s a way of softening the impression of abandonment and despair. They add dynamism to bleak city centres as new tenants are sought. This kind of temporary use of retail space has also been done in Toronto recently on the Danforth.However, the concept can be easily adapted to warehouses and factories of the kind Akin uses, thereby amplifying the impact of this kind of arrangement

What would happen if the City of Toronto passed a by-law enabling commercial realtors and qualified non-profits to apply for “Meanwhile leases?”  First, there would be vastly more space available for artists, which is a stated objective of the City.  Second, it would reward building owners and realtors, both financially and reputationally, to take signs out of dark windows and light up their buildings.  There must be incentives for both sides of the equation.

Those are the obvious benefits.  Less obvious would be the strengthening of creative industries, where space costs have inhibited business start-ups or driven self-employed creative workers out of the city.

There is also the economic bounce that it would provide to other initiatives of the City.  The City has invested in business incubators for decades, but would like them to multiply in number as quickly as possible.  Incubators can be non-profits, often associated with an agency of the City or local colleges and universities.  There is no shortage of academic and industry partners willing to provide oversight and direction to Toronto’s many promising young entrepreneurs.  What’s in short supply is no-cost or low-cost work space to house these pre-market business prospects. Some of these entrepreneurs may well feed off a buzzing, studio atmosphere full of creative people. The potential is palpable.

Yet more good might ensue from this.  Parts of town that have no street life might become lively again, as dark old buildings begin to house creative activity with a public appeal.  Concerts, art exhibitions, hackathons, and independent film events might start to occur in places that aren’t familiar to the general public.  Realtors might become adept at using the panache of their creative industry tenants to raise interest in the leasing or eventual redevelopment of their properties.  And who knows; with some prospect of affordable space, creatives might up their game too, doing more and better work, confident that there will always be a place to make it, show it, and sell it, right here in Toronto.

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