'It's not bouncing back:' Workers continue to return to downtown Toronto but recovery lags behind some cities

A man walks though a downtown Toronto office building with other buildings reflected in a window in this June 11, 2019 photo. THE CANADIAN PRESS/Graeme Roy

Torontonians appear to be returning downtown in greater numbers but the pace of the city’s economic recovery still lags behind many other North American cities, a new study suggests.

Researchers at the University of Toronto and the University of California, Berkeley have been jointly tracking cellphone data throughout the pandemic as a means of evaluating the economic recoveries in 62 North American cities.

Their latest report, published last month, found the level of cell activity measured in downtown Toronto between September and November had risen to about 53 per cent of the pre-pandemic norm, compared to 46 per cent in the spring.

That placed Toronto 41st among North American Cities.

San Francisco finished dead last in the rankings once again with cell phone pings at 31 per cent of their pre-pandemic norm, virtually unchanged from the spring.

“Toronto is sort of in a middle group of cities in that at least it's getting better. But it's not bouncing back,” Karen Chapple, who is the director of the School of Cities at the University of Toronto, told CP24.com. “It's not in the same category, you know, as a New York City (74 per cent) or a Halifax (65 per cent) and it is still the kind of fundamental resistance that we identified six months ago. We just have an unfortunate economic mix. There are just a mix of sectors here that are too reliant on the kinds of professional service employees that are perfectly happy staying at home.”

Chapple told CP24.com that the return of people to downtown Toronto in the fall was aided, in part, by some “pent up visitor demand” and the revival of big events which together are “compensating for the lack of worker traffic.”

But she said that with hybrid work likely here to stay the city still faces significant headwinds in the months and years to come.

Her prediction is that cell activity downtown will continue to climb before stalling out at about 70 per cent of the pre-pandemic norm, pointing to a permanent loss of some daytime office workers.

Toronto’s future success, she said, will therefore be contingent on what it does with all the extra space created by the departure of some jobs from the downtown core and the emptying out of some offices.

“I think you need to kind of take a reality check and look at the sectors that are going to do well and the ones that aren't and take advantage of the fact that folks are leaving and help others move into that space,” she said. “You know, you have to put the wheels in motion to really rethink your downtown. I think the city really has got to commit to doing that kind of strategizing and it hasn't yet.”

Office occupancy lingering at 42 per cent of pre-pandemic norm

The latest data from the Strategic Regional Research Alliance suggests that occupancy in downtown Toronto workplaces is now at about 42 per cent of the pre-pandemic norm after dipping below 10 per cent at one point last winter.

But it varies considerably by day of the week. On Monday it is only at about 29 per cent of the pre-pandemic norm while on Wednesday it shoots up to 57 per cent.

Pauline Larsen is the Executive Director of the Downtown Yonge Business Improvement Area (BIA).

She says that there have been some “really optimistic” signs of later, including pedestrian count data that showed an 11 per cent increase in the number of people on downtown Yonge Street over the recent holiday period (Dec 23 – Jan. 2) compared to 2019.

Larsen also said that consumer spending numbers provided by Moneris Data Services pointed to a 378 per cent increase in retail spending along Yonge Street in December compared to January 2022 when many businesses were shuttered due to COVID-19 lockdowns. Service spending, which was less impacted by the lockdowns, was up 12 per cent from January 2022.

“I think that economic recovery as a concept is just not a linear thing. There are things that come back more quickly and there are some things that come back more slowly,” she said. “Office occupancies are sitting at 42 per cent. But then we also have hospitality and we have visitors and tourists. So between the residents, the students, the tourists, the visitors, the employees, I think we (downtown Yonge Street) have benefited from having a lot of different reasons to come here.”

Foot traffic has rebounded more quickly in smaller cities

A November report from the Canadian Chamber of Commerce found that foot traffic in downtown Toronto is down 46 per cent from the pre-pandemic norm, putting the city well behind places like Brampton (up 27 per cent) and Brantford (up 38.5 per cent) where the downtowns are actually busier.

The report says that as a result of the pandemic it appears that the traditional employment hubs are shrinking “while outlying spokes are growing.”

Speaking with CP24.com, Chapple stressed that “Toronto is not dead” and said that she remains an optimist when it comes to its eventual recovery.

But she said “the wait and see approach is a big mistake” for a city that does face some ‘long-term issues” that might serve as a road block to a full return of office workers.

“You have a housing crisis with incredibly high housing prices and terrible congestion problems, some of the worst commute times in North America. Those are issues that don’t go away so you are still going to get those people who say they are going to move their kids to Bowmanville and just come in one day a week,” she said.