Canadian Businesses Face Headwinds, But Opportunities Abound
As well, Canada’s trade deficit has widened with the global slowdown, reduced U.S. demand for imported oil, and the fall in energy prices. Consumer spending growth did tick up and auto sales and production remain strong, but retail sales and housing will likely depress growth in the next few quarters as household borrowing has slowed and government tightening of mortgage credit conditions kicks in.
Nonresidential construction, however, is booming—in both office buildings and shopping centres as vacancy rates remain low and foreign businesses continue to pour into the country. Despite the enormous office construction in many cities, especially Toronto, space has been gobbled up and A-rated buildings are now planned in areas formerly considered undesirable—for example, just north of Toronto’s waterfront area, south of Front Street.
With the renovation of Union Station and the completion of the new RBC WaterPark Place, Maple Leaf Square and Telus House already south of the Bay Street financial district, other businesses are moving south. Moreover, with the explosion in the number of condominium towers, many of them small and comparatively affordable, there is a readily available pool of well-educated younger workers happy to work downtown. This is not unique to Toronto and has been evident in Vancouver and other major Canadian cities. Immigration continues to be a major growth factor in major cities. Population density is rising as land-use restrictions limit the number of single-family homes and rent controls encourage condo-for-rental construction. The burdens placed on our roadways and public transportation systems, as well the cost of gasoline and pollution, are encouraging people to live closer to workplace hubs.
This continued urbanization of the population nearer to the downtown core boosts demand for a widespread array of personal and business goods and services. Large grocery chains are already opening up in downtown business centres and there is a remarkable proliferation of drug stores—larger and more glamorous than ever. Restaurants and fast food establishments in all price ranges are sprouting at an amazing rate and downtown shopping choices are expanding. We have yet to see the delivery service capabilities available in such places as New York City, where you can order in just about everything from sushi to furniture with a moment’s notice, but that is coming as well. Already, dry cleaners are providing downtown home and office pick-up and delivery, walk-in hair and nail salons are multiplying and one-day or same-day alterations, shoe repair and even gourmet food deliveries are commonplace. Couriers are everywhere and most anything people need is within walking distance. Even families are moving downtown; hence the emergence of new toy stores and children’s clothing shops.
More downtown day care is needed as are schools, but that too will come. Many boomers are finding downtown living an attractive alternative for retirement or partial-retirement, close to the entertainment districts, medical offices and hospitals. Empty-nesters are looking for pied-à-terre—their city dwelling—allowing them the luxury of a country cottage. This trend provides enormous opportunities for business and goes hand-in-hand with the need for better online shopping capability. As a rapidly increasing number of U.S. websites accept Canadian credit cards and ship (often for free) to Canada, competition is rising fast, augmented by the rapid influx of major U.S. retail chains. These challenges are opportunities that Canadian businesses cannot afford to miss.