Have you ever heard about the 18-hour city? Well, the coronavirus pandemic has brought on a lot of changes and challenges to every industry in the world, and one of the most hard-hit is the real estate sector. However, trends have cropped up expected to help commercial and residential real estate industries thrive way beyond 2021. One of these is the development of 18-hour cities.
Based on PwC Canada’s report entitled, Emerging Trends in Real Estate, Canadians are now veering away from sleepless cities like Toronto and Montreal because of the ongoing pandemic and affordability issues. The demand for places where people can work, live, and play is getting stronger. This, as more and more people, are working from home and looking for more affordable housing in cities that are less populated.
As remote working has made it possible for people to live in the suburbs while they keep their jobs, the PwC report pointed out how the 18-hour city trend is emerging all across Canada. Due to accelerated growth, this can already be seen in places like Quebec City, Victoria, and Halifax.
Cities like Ottawa are even looking into the possibility of developing a 15-minute city. This enables residents to access daily needs like schools or grocery stores within 15 minutes from their home, either by cycling or by walking. They are making this happen by subtly intensifying the growth of the traditional single-family neighborhoods while boosting more varied land uses.
So, what exactly is an 18-hour city?
This is the term used for the “almost 24-hour” cities. These are the ones that stay up late but still find time to sleep, albeit only for 6 hours. These cities are identified through the following metrics:
– Are experiencing job growth, especially in the tech sector
– Are going through growth in population, especially among young people
– Have downtown areas that are populous and vibrant
– Have good transit systems, with high percentages of commuters
– Have low crime rates
– Have 24-hour amenities that exclude transit
– Have regional individuality
These are all factors that encourage people to stay. Plus, the most important thing about 18-hour cities is that their cost of living is more affordable than to 24-hour cities like Toronto, London, or New York. When you think of these 18-hour cities, think Calgary, Munich, Portland, and Manchester.
How are these 18-hour cities developed?
Generally, there are two ways for these 18-hour cities to emerge. The more gradual one is the congregation of rural populations into urban centers. Meanwhile, the faster way, which is happening in Canada, is the reverse population shift. This is when people pursue suburban living for space and savings. Ultimately, these suburbs will grow their own identity and draw in the type of culture and fun that will put an end to the routine of only having home to go to after work or going to the supermarket.
In Ontario alone, it can be said that while 31 percent of millennials still prefer to live downtown, those who’d go for a suburban living are already at 35 percent. Those who would like to purchase a home in a town or a small city are at 23 percent, while those who’d opt for more rural areas are just at 11 percent. This is based on research done by Ipsos for the Ontario Real Estate Association (OREA) early this year.
This survey also indicated how 58 percent of Ontario’s boomers or those aged 55 years old and older prefer to own property or a home in a small town or a rural area. Their focus is finding one that is senior-friendly, affordably walkable, and has easy access to amenities.
How will these 18-hour cities affect commercial real estate?
The development of these 18-hour cities will call or has already called for changes to the commercial real estate scene. Malls that still have excess lands now need to look into developing this unused acreage into either mixed-use or residential properties. There is also the huge possibility of converting this space into warehouses to be used for last-mile delivery, distribution, or fulfillment centres. This, as the demand for online shipping increases every day and needs to be addressed as soon as possible.
When it comes to office spaces, there are different views on the continued need for them. While some believe that the ongoing pandemic will cause the renewed interest in development in suburban offices development, others predict that employees will soon want to return to their offices because of their desire for social connections. However, it must be noted that there are already many who would like to work from home or work closer to home even when the pandemic is over.
Based on the Workforce of the Future survey done by PwC Canada, which was released in September 2020, 37 percent of employees prefer to work in the office all or most of the time. However, people who wish to entirely or mostly work at home or remotely come close at 34 percent. The remaining 29 percent seek a balance between the two choices.
According to PwC Canada’s National Real Estate Leader Frank Magliocco, companies that have the digital capabilities to sustain a remote workforce are now reassessing their needs when it comes to their real estate portfolio.
Meanwhile, repurposing medical office space might also be on the rise due to the pandemic and the emergence of the 18-hour cities. Although the adoption of health services delivered virtually has been done rapidly due to the coronavirus, there is still an ongoing need for physical space for diagnostic equipment and care that can’t be done digitally. Plus, the aging population will always have the demand for more accessible health and medical services. With this, opportunities have now moved health care services from hospitals to community locations with high traffic like malls or other commercial complexes.
So, as you can see, the development of these 18-hour cities goes hand in hand with the trends predicted for commercial real estate. As more people converge towards suburban areas, the re-purposing of existing properties to accommodate this exodus will also continue.
For More Information, Contact:
John (Adam) Watson, CEO, CanCap Mortgage Group Inc.
Email: email@example.com Tel: 416-452-5281