TORONTO BOARD OF TRADE. DECEMBER 4, 1996
When Brad Henderson asked me to join the panel, he was not aware that I am in fact an expert in the field of real estate. In the early 80’s, I was in Vancouver as President of Premier Cable Systems. Amongst my friends were Jack Poole of Daon, Nelson Skalbania and other authorities in the real estate field. They convinced me that land was the only sensible investment because as everyone said, “They are not making any more of it”. They soon had me investing in condos in Hawaii, MURBS, ‘development properties’ in Port Alberni and similar ventures. I ended up moving from a high-tech manager to being a slum landlord!
I may have missed the top of the market by a couple of days but certainly not more than that. The values dropped. The interest rates escalated to 20%. To use the classic phrase “I made a small fortune in real estate, the problem was, I started with a large fortune”.
All of this only says that one should pay attention to the true professionals and avoid speculating in areas one knows nothing about.
From a business perspective, Cantel did rely on the pros, with pro and con results.
On the pro side, we did move into space throughout our early career that reflected the image of the corporation, at least as we saw ourselves. The space tended to reflect a young, energetic and high-tech organization.
Our first space was in the new Cadillac Fairview Tower at 20 Queen Street. In a start-up situation, we were only about 20 people but the offices looked as though we were on our way to being a true competitor to Bell Canada.
As we expanded to several hundred people, we moved to 40 Eglinton Avenue East. We were able to sign our building which happened to be next to a rather conventional Bell Canada building.
However, our major move was when we expanded to over 1,000 people and moved to 10 York Mills. This was a location that had large floor plates, raised flooring throughout for the extensive LAN’s, as well as the wiring and air circulation. In general, it was a Smart Building. More importantly, the large floor plates allowed us to put together units that really benefited from working together.
The building had some major advantages. It had good access to the airport, excellent parking, a bus terminal right in the building and most important was directly on the subway with a station in the lower level.
However, when we moved in, in the late 80’s, our cost per square foot was very high. My problem with the building, however, was less the cost than the fact that I am basically a ‘core’ person. In terms of access to restaurants, shopping or other amenities for the staff, it was nowhere (I could walk to work but still did not enjoy the semi-suburban location.).
Our problem during all this period, however, is that we were growing so rapidly, we could out grow any site we moved into. By the mid-90’s, Cantel was over 2,500 people, although not all were at the York Mills location. We needed to consolidate once again, as we had offices in multi-locations around Metro.
Ted Rogers’ vision had always been one integrated location where all the groups who need to cross-fertilize ideas could be located. In fact, Ted wanted a ‘campus’.
The Confederation Life Building fit this concept and fit the cost.
We broke out of our past pattern of leasing and moving every four or five years and bought the building for approximately $32,000,000.
In fact, we bought three buildings. The main location was at One Mount Pleasant (referred to as OMP) and two subsidiary buildings at 321 Bloor Street East and 100 Huntley Street. Although I have heard varying figures, the cost to build the complex was somewhere in excess of $130,000,000.
The pro’s of this move were:
• It is a superb physical facility (although I tend to think of it as Moscow Modern). Before Confederation Life could even fully move in, they had developed a fitness centre for example which had state-of-the-art equipment that was left unpacked.
• It provided excellent meeting space and office facilities for the 1,800 people we are moving into the location.
• It was a bargain. It even includes a portion of an art collection.
The con’s of the location are that its access is not as good as 10 York Mills in terms of the airport and subway. However, it is within easy walking distance of Yonge & Bloor with the amenities in the area.
We also need to upgrade 321 Bloor Street East to make it a ‘Class A’ building. It is possible we may demolish 100 Huntley Street for additional parking.
The implications of a move like this for the GTA are that there are some great bargains still available. While tenants have taken advantage of the current low leasing rates, nothing beats buying a quality building in a good location at bargain rates. This may well be a trend over the next several years.
There are not many Campus-style buildings available in the area. Had we chosen to remain in a suburban location, we would have had to build. As it was, we obtained 380,000 sq. ft. in OMP and another 350,000 sq. ft. in the Bloor Street building for $32,000,000. This is a bargain on a per square foot basis. To add to the benefit our tenant improvement costs will likely only be about $3.00 per sq.ft.
Ultimately, we will put together parts of Rogers’ Cablesystems and Rogers’ Network Services, as these groups will be working increasingly closely with the Cantel group. In total, there could be about 3,500 people working in the two buildings.
It is interesting that as both Cantel and Cable were previously located in suburban areas, the access was largely by automobile. We predict this will change dramatically as we tap a labour pool with subway access.
There was and still is one major drawback to the move and that is the taxes. Our total taxes will run $2.9 million dollars per year, even at the best rates we could negotiate with the City. For example, it would appear that the square foot tax rates are about $8.00 at 321 Bloor versus perhaps $3.00 in Mississauga.
However, the advantages still outweighed this disadvantage.
It is interesting to note that this is one of the first major recent moves of a large corporation from the suburbs into the city. We have received outstanding co-operation from the Mayor and the staff and this certainly was one of the factors leading to the move.
WHY STAY IN THE GTA?
For a communications company, the GTA is one of the best places in the world to locate. The Globe & Mail in its Report on Business in 1995 called Toronto “the smartest city in Canada”.
From a communications standpoint, it is centrally located in North America, has extensive fibre networks and even its over the air transmissions are somewhat less cluttered than those of New York or Los Angeles.
It has the CN Tower which Cantel used for microwave hops to a wide area around Southern Ontario. We also located one of switches at the base of the CN Tower.
One of the reasons why Canada has a first rate post-production facility in Toronto is the availability of these high-speed links running along King Street from Parliament to Dufferin.
SMART Toronto, an organization to promote the GTA as a world-class high-tech centre, is working to co-ordinate the various fibre optic facilities around the city to ensure that all buildings and locations requiring access to high-speed nets will have the facilities they need.
Beyond the Smart City aspect, however, is everything that Fortune pointed out in its survey, in its November 11, 1996 issue – that Toronto is the best city outside the United States in which to live and to work. One only needs to travel as extensively as I do, to realize that this is no idle comment.
Furthermore, a third of the population of Canada and even a higher fraction of the business activity is within about a 300 kilometre radius of downtown Toronto.
In a word, we have a wonderful package to sell. The challenge is that while we have a great product, we need a great promotion.
This is what the Greater Toronto Marketing Alliance is all about. This is a co-operative effort amongst the Greater Toronto Economic Development Partnership (The Municipal Economic Development Officers and the Provincial Office of the GTA) and the GTA Boards of Trade and Chambers of Commerce. This has received the strong support of the GTA municipalities through the Council of Mayors. The purpose of the GTMA is to promote the area nationally and internationally as a place to maintain or establish businesses. The organization will be jointly financed by the private and public sector starting in 1997.
Just as Cantel saw Toronto as the logical place to establish its business office, other companies will do the same provided we do a good job of promoting the area.
The impact of the GTMA on real estate sales and development in the area should be immense. We will of course be looking for support of this project from those in the real estate industry.
It is a smart idea to be in a Smart City.
Back to Section F Index or just read on
THE ROTARY CLUB OF TORONTO. FEBRUARY 18, 2005
Rotary International and the Greater Toronto Marketing Alliance have a lot in common. It is 100 years since Paul Harris founded Rotary International in Chicago. Two of the founding principles of Rotary were to
• Become an international organization to promote mutual trade, investment and understanding (Rotary has certainly done this being in some 150 countries).
• To give people the opportunity to provide community services to worthwhile causes.
I am particularly pleased to have the opportunity to discuss the GTMA because it is clearly in both of these areas. The mission of the GTMA is “to expand the economy of the Greater Toronto Area by raising the profile of the region internationally to attract new investment and employment”. As such we are by definition also very international. In fact, you may not have even heard of us because we do not market within Canada. We are also as a not for profit organization acting on behalf of all businesses and residents in the GTA as a community service. As I outlined why we are doing what we do you may want to think about how your company or organization might want to be involved in this fascinating process.
When someone mentions the Greater Toronto Area, many confuse this with the amalgamated City of Toronto. The City is in fact just the core of the GTA. As you will note in the material at your tables, the GTA includes Halton, Peel, York, Durham and the City of Toronto.
This is an immense area covering some 7,700 square kilometers. It has a population of well over 5.3 million people.
What may surprise you is that this is the fourth largest metropolitan region in Canada and the United States exceeded only by New York, Los Angeles and Chicago.
It is also one of the fastest growing City Regions in North America growing at over 100,000 people a year (now you can sympathize with the planners who are trying to stop gridlock on the 401!)
And yet the GTA remains almost unknown around the world or at least it is regularly underestimated. I just came back from a GTMA Mission to India. When I mentioned to an associate from the United States that I had taken the non-stop flight from Toronto to New Delhi, his reply was “Oh, does Toronto have an international airport?”
This amazing City Region is clearly the economic driving force in Canada. In fact it generates one-fifth of Canada’s GDP. It employs nearly 3 million people or almost one-fifth of all employed Canadians.
It is Canada’s largest retail market representing some $46 billion or 15% of all Canadian retail sales.
The Toronto Stock Exchange is ranked North America’s third largest by dollar value traded.
The area dominates Canada’s concentration of head offices with nearly 40%.
And we tend to forget that the GTA is second only to Detroit in terms of automotive manufacturing.
This is clearly a City Region of substance.
And yet incredibly enough until the formation of the GTMA, there was no one promoting the area as a City Region. Certainly, Markham used to market Markham, Mississauga marketed Mississauga but the international community looks at the resources of an entire City Region rather than the individual components of it.
About seven years ago development in the GTA was starting to level off. At the time I was Chair of the Toronto Board of Trade. The Toronto Board is a great organization but it is a policy body that tends to point out all the problems in the area e.g. the roads have potholes, the taxi system is poor, the rents in the core are too high, etc. I looked at this program and while I had no problem with someone pointing these things out, I also felt that the GTA was a tremendous product and something that someone should be marketing actively.
Co-incidentally Mayor Hazel McCallion had established and was the Chair of the GTA Mayors and Regional Chairs Committee. She saw exactly the same need.
We put together a lose amalgamation of the Boards of Trade and Chambers of Commerce in the GTA and the Mayors and Chairs Committee representing twenty-nine municipalities joined with us to establish a single point of entry, a single voice if you wish for the international marketing of the GTA. The GTMA is really a coordinating body. The individual municipalities retain their own Economic Development departments in most cases but they have agreed to outsource their international marketing to the GTMA.
THE STRUCTURE OF THE GTMA
The GTMA was established as a Public/Private Partnership often known as a PPP. This is a very unusual process for Canada although it is relatively common in the United States. In fact, in the US the Chamber of Commerce often takes on this role on a purely private sector basis. However with a good Canadian compromise, it was felt that this should be a co-operative effort.
We are funded about 60% by government with the municipalities providing most of the core funding but with considerable assistance from the federal government. The remaining 40% comes from the private sector.
It is easy to see why private sector firms would want to be involved. Obviously the faster the growth in the GTA, the more business opportunities exist. This is why we are strongly supported by the banks, Bell, Toronto Hydro, Enbridge and many similar firms. As you would also expect we have the active involvement of real estate firms, legal firms, accounting organizations and similar groups who will benefit from new businesses entering into the area.
We in turn benefit greatly by having this kind of expertise available. When we bring companies into the GTA, we are able to put them in touch with organizations providing the kinds of services they will need to get established here.
One of the greatest drawing cards to the GTA is the highly educated work force. Over 43% of employees in the area have a post secondary degree or diploma. As you can imagine, amongst our greatest supporters are the universities and community colleges and our honorary board includes the presidents of the three major universities, most of the community colleges and a wide selection of community leaders including several bank chairs.
There is also a working Board which has as its honorary co-chairs Mayor David Miller, Mayor Hazel McCallion, John Hunkin and Ted Rogers.
As we depend greatly on volunteers to support our work we are able to do the marketing function with a small but dedicated staff of six under Karen Campbell, President and CEO.
The GTMA operates on a budget of only about $2 million a year which is miniscule relative to Montreal International which does a similar function with a budget of over $10 million and a staff of over 50. We get around this by levering the monies we have with volunteers.
SO WHAT DO WE DO?
Believe it or not, we are the only pan-GTA organization in existence. The original Mayors and Chairs Committee dissolved when the Greater Toronto Services Board was started several years ago. This lasted only about two years and for a variety of reasons was doomed to dissipate.
There is therefore no one other than the GTMA to package the City Region and develop the marketing materials to promote it.
For example, no one had done Sector Studies for the Region and yet we all know that companies tend to go where there is a cluster of similar industries. This ensures a labor pool, research support in the area and as a demonstration that others have found the City Region a very good place to operate. We have therefore done Sector Studies in areas such as the automotive industry, call centers, biotech, advanced manufacturing, information technology and communications and even the agribusiness. We do these by outsourcing the studies on a co-operative basis with major firms such as Ernst and Young, Price Waterhouse Coopers or others.
We then put summaries of these together in the form of marketing brochures. We also of course develop general ‘lure’ brochures explaining the many advantages of the GTA as a place in which to do business. Amongst the many reasons are that
• The GTA is a low cost entry point to the North American marketplace with access to 135 million customers within a day’s drive or an hour’s flight.
• It is the most multi-cultural and multi-lingual city of its size in the world according to the United Nations and Fortune magazine with over 169 different countries of origin represented with over 100 languages spoken here. This makes the GTA an ideal location for outreach programs around the world.
• Our work force is not only highly educated as noted but provides a degree of stability unknown in Silicon Valley or elsewhere.
• We have an unrivaled quality of life being the third largest producer of English language theater in the world. This will only improve with the new opera house, AGO, ROM and other world class facilities.
• Even with the climbing Canadian dollar, we are still substantially e.g. 30% less expensive as a place from which to operate than other areas in North America or around the world.
In addition to the print material we produce CD ROMs, in-flight shorts for Air Canada international flights and as would be expected have developed a comprehensive web site.
We deal with our consulates around the world and they have been very helpful in referring potential investors.
However, all these things are somewhat passive and no good sales organization can afford to be that. Where applicable we participate in major trade shows such as the Society of Automotive Engineers or Biotech conferences.
However, we also take the story personally to areas that we believe should be considering the GTA as a place to set up a business. Specifically we run Missions that are self financing and are attended by representative of both government and industry. These have been run to Silicon Valley, New York, Washington, the EU in Hamburg and elsewhere, London and most recently India. In fact I just returned exactly a week ago after co-chairing a Mission to India with Hazel McCallion.
The GTMA has been very successful in bringing new industries into the area and a number of these have been from India. For example, we have worked with Infosys, Polaris, Cognizant and Satyam. As we made presentations to large groups in New Delhi, Hyderabad, Bangalore, Chennai and Mumbai set up by the Confederation of Indian Industry, these companies gave testimonials as to how successful their location in the GTA had been.
Everyone has heard of outsourcing and offshore development of software and manufacturing. The relatively low cost in countries such as India and China makes some of this inevitable. We sell a concept called near-shoring because we believe that even if some development work is done offshore, there is a requirement for both a marketing and a systems analysis job to be done close to the customers. We point out that the GTA is the logical place from which to exploit the North American marketplace.
SO WHY IS ALL OF THIS OF INTEREST TO MEMBERS OF ROTARY?
As you can tell we are always selling! But really my purpose here today was just to inform you of a major effort going on to keep the economy of the GTA expanding rapidly.
In addition to getting involved with the work of the GTMA just because it is a good thing to do and good for the community, many organizations participate because they want to be in the front of the line when it comes to making contact with potential new investors. For this reason, just to use the recent India Mission as an example, we had participants from a legal firm specializing in immigration law, a major realtor, a national public relations firm, the Munk Centre for International Studies, the Rothman School of Management, a number of private companies and representative of the various municipalities. Your company may be interested in early contact with potential offshore investors in the GTA. If so, please leave me your card and we will get in touch.
We are also pleased to invite you to events run in the city from time to time and we have an electronic newsletter that we would be pleased to provide.
We have a great product in the GTA. We have the Location! Location! Location! And now all we have to do is Sell! Sell! Sell!
We are a relatively new organization compared to Rotary International and I have every expectation that we will be around in 100 years still promoting the GTA as one of the best places in the world in which to live and to work.