Investigating the Impact of The City Centre Airport Redevelopment on Downtown Edmonton. Prepared by: Dennis Bridges August 1, 2011

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1 Investigating the Impact of The City Centre Airport Redevelopment on Downtown Edmonton Prepared by: Dennis Bridges August 1, 2011 Prepared for the

2 Table of Contents Investigating the Impact of The City Centre Airport Redevelopment on Downtown Edmonton... 1 Executive Summary... 1 Introduction... 1 Analysis... 2 Implications & Recommendations... 4 Introduction... 6 The... 6 Interest in the City Centre Airport Redevelopment:... 6 Methodology:... 6 Research... 7 The City Centre Airport Redevelopment... 7 Design Elements... 7 Timelines... 8 Transit Oriented Development... 8 The LRT... 9 Expansion... 9 Details of Expansion Effect of LRT Development on Property and Business Downtown Edmonton Live Work Shop Play Learn Analysis...15 Ridership Projections Projected Effects Access to Capital Energy Use ii

3 Economic Stimulus Property Market Demand Centre of Excellence Access to Skilled Labour Increased Property Values Sustainability Development Conclusion...22 Implications for Business Increased Traffic via LRT Market for Sustainability Transportation Property Values and a Focus on Urban Development Recommendations For Business For Future Research Conclusion iii

4 Investigating the Impact of The City Centre Airport Redevelopment on Downtown Edmonton Executive Summary Introduction This is a report commissioned by the Downtown Business Association of Edmonton in order to assess the effects of the City Centre Airport Redevelopment on the Downtown core and identify any opportunities or challenges that may arise as a result. The report was commissioned in response to a decision by City Council in July 2009, to implement a phased closure of the City Centre Airport and redevelop the land into a world leading, environmentally sustainable, transit-oriented community for 30,000 residents. The design team chosen by council to make this vision a reality is the Vancouver based firm Perkins & Will. Their design incorporates innovative energy initiatives, dynamic landscape architecture as well as calculated and creative urban design and architecture. A new community will evolve on these lands over the next generation that promises to showcase our history, our resources, our pioneering spirit and our people. When completed, this vision will go beyond carbon neutral, to the leading edge of sustainable development anywhere in the world (Barry Johns, Executive Director of Design, Group2 Architecture Engineering, 2011). The photo to the left shows the airport lands from the Quest building on 103 rd ave and 105 th street. Land development is set to begin at the airport in Following the instillation of basic utilities and construction, residents could be moving in as early as 2016 or All projections in this report are limited to the forecast period of the city s economic impact assessment, as it projects the development will be 1

5 complete and fully populated by the year The Edmonton City Centre Airport Redevelopment (ECCAR) will be connected via light rail transit (LRT) to the downtown core; estimated travel time is around eight minutes. Expansion of the LRT system is an ongoing initiative, as the city plans to one day have every section of the city connected via LRT through the Downtown core. Currently construction is underway on what will be the northwest line of the LRT system. This expansion will leave Churchill Station, stopping at Grant MacEwan University, before exiting downtown and eventually arriving at NAIT. Further plans for this section of the LRT include, stopping at the airport lands and continuing out to the City of St. Alberta. The construction up to and including the NAIT Station is scheduled to be completed by April of The city predicts this expansion to NAIT will add approximately 13,200 people to weekday LRT ridership. The most recent prediction from Transportation s Policy Implementation and Evaluation section suggest that the City Centre Airport redevelopment alone could add somewhere in the range of 4,300 boardings to the aforementioned 13,200. However, this prediction is based on a population at the airport lands of only 24,000 residents. Thus, we assume 17,500 to be a reasonable estimate for the number of people who will ride this section of LRT southbound and could make downtown their final destination. A city s downtown core is often referred to as the engine that moves it forward, facilitating growth in all other sectors and industries. If one thinks of the city as an ecosystem, the downtown core could be equated to the tree that provides shelter, nourishment and oxygen in the form of economic stability and stimulus, sustaining life and facilitating growth. Through this analogy it is possible to understand how the success of the core filters into the surrounding communities and vice versa, the bigger and stronger the tree the larger and more vibrant the ecosystem. The Downtown Community can be characterized under five major headings, live, work, shop, play and learn. Evaluating Downtown Edmonton under each of these categories offers insight into current and future property market conditions, market segment attributes and the demographics of both employees and residents. This analysis is critical in making reliable projections about how downtown will be affected by the ECCA community. Analysis Research suggests that Downtown Edmonton can expect to see the number of people entering downtown via LRT increase by approximately 11,600. When linked to the average disposable 2

6 income of Edmontonians this represents an influx of approximately $330 million dollars a year or over $20 million in clothing expenditure alone. LRT service will increase traffic, which generally increases sales, rents and ultimately property values. However, this increase in traffic will not only come from LRT expansion, but also as a result of increasing population density. The City Centre Airport Redevelopment could revolutionize energy use in the downtown core. The design team plans to connect downtown to a district heating system powered by one hundred percent renewable energy sources. If the majority of the upfront costs associated with constructing such a system are born by the city it will make these resources more viable for developers and could eventually make the downtown community s energy use far more sustainable. The closure of the airport will mark the end of a collection of building hight restrictions that limit the size of buildings In the downtown core. The removal of height restrictions will allow architects more freedom to styleize building designs as maximizing floor space becomes less crucial. Furthermore, it will eventually encourage higher density development, if accompanied by increasing demand and will contribute to the vibrancy and prosperity of the downtown core. Regardless it will have a positive impact on architecture and design making the city s skyline more appealing as development continues. The research done on current and future market conditions and market segment attributes suggests that concerns about the Edmonton housing and commercial real estate markets abilities to accommodate development at the City Centre Airport and in other areas of the city, are unsubstantiated. Development at the airport lands accounts for approximately 8.35 percent of the city s total growth over the forecast period used in the economic impact assessment. The continuing development of office towers in the downtown core suggests developers are confident that demand will rise to accommodate extra square footage. Moreover, the design team is well aware of the market saturation rate and plans to stagger development accordingly. Market segment attributes suggest that the airport development will not compete directly with downtown; rather the majority of growth at the airport is likely to replace growth at the extremities of the city and possibly other transit oriented developments (TOD). Thus, the ECCA redevelopment signals a shift from suburban sprawl to urban densification, which has major implications for business and municipal development. If the development of the airport lands 3

7 succeeds in shifting Edmonton s focus from suburban to urban development the increase in density will make it easier for the majority of businesses to survive and thrive. Furthermore, as a city s density increases its tax revenue per sq. km increases in proportion to its total cost of infrastructure, meaning the city earns more money at a lower cost. These costs include sewer systems and other utilities, schools and services like the police and fire department. The data suggest that if considered as products the ECCA and Downtown could be seen as compliments rather than substitutes. The redevelopment s focus on sustainable technologies and renewable energy presents an opportunity for Edmonton to play a more major role in their development, manufacture and or distribution, as specially as the Northern Alberta Institute of Technology is situated directly adjacent to the redevelopment. An increase in the city s access to skilled labour is also a function of the opportunities provided by this connection and the experience it will afford the current labour force. The availability of this skilled labour will make other sustainable initiatives in the downtown core possible and or more viable. Increasing interest in sustainability brought about by the ECCAR opens the door for downtown to leverage the inherent sustainability of dense urban centers in order to attract and retain business and residents. Recent research identifies a number of ways in which the density of urban centers provides a far more sustainable or environmentally friendly lifestyle than suburban communities, predominantly on account of a lower frequency and duration of automobile usage. Implications & Recommendations Increased traffic via LRT will increase the sales volume of nearby businesses. This effect will be amplified by the city s increasing density. Businesses surrounding areas such as Churchill Station where passengers will transfer to other trains or buses, particularly businesses that sell food or other convenience items will likely see increasing revenues. As property values increase, particularly along the LRT line, rents will also gradually increase. However, the increase in property values is a function of the increase in potential revenues which will more than compensate for increases in rent. Growth in TODs will decrease the city s dependence on automobiles, lowering the cost of parking for employers as fewer employees use their cars to get to work. This could ultimately lower the market value of downtown parking lots, providing more incentive for their development and 4

8 contributing to the vitalization of the Downtown Community. A drop in the use of automobiles will in turn encourage people to move closer to the core also contributing to densification. There are a number of changes happening both inside and on the periphery of the downtown core that will almost certainly change the face of Edmonton. This could be an excellent opportunity to expand the appeal of downtown living to a new market of consumers, emphasizing the sustainability and connectivity of downtown living and exploiting the buzz created by perspective developments. LRT expansion warrants attention being directed toward the retail areas within the city s pedway system, preparing them for retail business operations. An ideal starting point would be Churchill station as it will likely see some of the highest traffic counts due to transfers and it currently houses some administrative entities that would need to be relocated to make room for retail business operations. Available retail space Bay Station Further research should be conducted on the true sustainability of Downtown Edmonton. Seeking to understand and identify how the core can use its per capita environmental impact as a starting point for attracting perspective residents. Further inquiries should be made into the impact of proposed LRT expansions, in particular the downtown connector expansion, as it will greatly impact the flow of traffic in the core and any change in traffic patterns can have major implications for business. It would also be advantageous to conduct further inquiry into the proposed arena district, as it could impact people s perceptions of the Downtown core and motivate residents and businesses to invest. Finally, it would be wise to continue researching ways to encourage densification. The ECCAR and other transit oriented development is an important step towards a cultural shift away from automobiles that will increase density, making the city and its downtown more efficient and more attractive to investors. In the long-term increasing density will create more opportunities for business and development and ultimately make downtown more vibrant and prosperous. 5

9 Introduction The Interest in the City Centre Airport Redevelopment: The close proximity of the airport lands development and the project s incorporation of the city s LRT system, coupled with a strong, unique vision for an innovative community raises questions about what opportunities it may provide the city, the neighboring communities and in particular the downtown core. In response to Edmonton s City Council s decision, to implement a phased closure of the City Centre Airport, in July 2009 and go ahead with the redevelopment of the airport lands, the downtown business association commissioned this report. It endeavors to provide an understanding of how the development will affect the Downtown core and identify any business opportunities or challenges that may arise as a result. In choosing a design team to guide its vision the city held a Figure 1 worldwide design competition, selecting five finalists from thirty-three international submissions. These five finalists submitted proposals and participated in a lengthy interview process that would allow council to make a well-informed and calculated decision. On June 22, Perkins and Will were the firm endorsed by city council to lead this massive urban renewal project. The city was adamant in choosing the best team for the job rather than the best ideas, as the team will have another 15 months to come up with a final master plan for transforming the ECCA lands into a sustainable, transit oriented, family-friendly community (City of Edmonton, 2011). As this development project is still in the planning phases the conclusions drawn here are based on the most recent, quantitative and qualitative information available prior to August 1, Methodology: The initial planning phases of this report considered the optimal way to obtain concrete information from which to draw reasonable assumptions where necessary. It was determined that the research component would consist of an extensive literature review and a set of one on one and group interviews. Following the research component was an analysis of both the qualitative and quantitative data collected. All necessary assumptions are drawn based on this analysis. Using these necessary assumptions the researcher considered the projected effects of the City 6

10 Centre Airport Redevelopment in order to determine whether its overall effect on Downtown would be positive or negative. The literature review focused on the City Centre Airport Lands, similar developments and development projects, sustainability, Downtown Edmonton and light rail transit. Similar developments that were reviewed included, Malmö and Hammarby Sjöstad in Sweden, and Stapleton airport in Colorado. With regards to sustainability and the environment, research focused on suburban vs. urban development, sustainable technologies, and sustainable business practices. The researcher reviewed the city s Downtown and Municipal development plans as well as online sources that provided information on current and future developments happening in the downtown community. Finally the literature review covered the City of Edmonton s LRT development plans, and the effects of LRT development on property and business. The results of this literature review provided a framework for developing interview questions and are incorporated in the following analysis. In the final phase of data collection twenty-six people from 21 different stakeholder groups were interviewed. Interviews were primarily conducted one on one in effort to elicit a more candid response. Research The City Centre Airport Redevelopment Design Elements The design team s concept has a number of key features; it incorporates deep well geothermal and biomass technologies into a mixed-use sustainable community for 30,000 residents. These sustainable technologies will provide up to 20 MW of renewable energy that could service the site and several institutional buildings in the downtown core through a district heating system that would take the development beyond carbon neutral (Johns, ECCA Airport Lands Competition, 2011). The design also features 50% open space, a regional park that completes a 20 km river-toriver loop surrounding downtown and large-scale urban agriculture within a transit oriented community. The design will also give NAIT the ability to expand teaching facilities and acquire purpose built housing for their students. Barry Johns, a local architect and key member of the Perkins & Will team says, The vision we bring to the airport lands is derived from a deep understanding of the place we call Edmonton. A new community will evolve on these lands over the next generation that promises to showcase our history, our resources, our 7

11 pioneering spirit and our people. When completed, this vision will go beyond carbon neutral, to the leading edge of sustainable development anywhere in the world (Barry Johns, Executive Director of Design, Group2 Architecture Engineering, 2011). The development will focus on incorporating a strong sense of community, connectivity and sustainability with medium to higher density housing options. To lower their ecological footprint, residences will have access to gardens where they can grow their own food. Other innovative elements may include a special waste collection and treatment system, a viewing area in the old control tower, functional lake and more. Timelines The current timeline set for the Edmonton City Centre Airport Redevelopment (ECCAR) gives Perkins & Will until October 2012 to complete a master plan. This date is fixed, as the city will need to have the plan in order to finish allocating their budget. The first shovel is set to break ground at the airport in 2014, provided major engineering and zoning can be completed in two years. Once ground has been broken it will take approximately two more years to install the necessary utilities and consider selling properties, meaning the earliest someone could be living on these lands would be 2016 or 2017 (Sande, 2011). All of these dates and certainly anything beyond these dates are subject to change based on design elements and development progress. The forecast period of the city s economic impact assessment extends to the year 2044 at which point the development is assumed to be complete and fully populated (Applications Management Consuling Ltd., 2009). In order to maintain the consistency and validity of predictions this report will limit its projections to the impact assessment s forecasted timeframe. Transit Oriented Development Transit oriented development (TOD) focuses on building more compact and sustainable communities that allow occupants to walk, cycle and use transit more easily, which in turn encourages them to do so. The City of Edmonton has developed a set of guidelines for creating and identifying TOD. They define these developments as communities that concentrate housing, shopping, and employment along a network of walkable and bikeable streets within a five-minute walk in any direction of a transit station (or 400 meters) (City of Edmonton, 2011). The goal of this initiative is to transform the areas around transit centers and LRT stations into vibrant cores where mixed-use activities bring people together and increase the density of the city as a whole. The presence and position of transit stations will thus dictate where development will begin and how it will proceed on the airport lands. Arguably the most unique and exciting thing about airport lands is that they offer the opportunity for greenfield development 2 km from the 8

12 downtown core. The design team will follow the TOD Guidelines put forward by the city and create Edmonton s first purpose built TOD community. Some advantages to this form of construction include, increased transportation options, fewer automobile trips, lower individual transportation costs and easier access to daily needs. From the city s perspective TOD can facilitate a more efficient use of infrastructure, for example, major services like water, sewage and power, as they are able to service more citizens with fewer pipes, lines, other materials and labour costs. TOD can also increase the city s revenue as it increases transit ridership. The 400-meter area around an LRT station can be referred to as a catch basin. Theoretically, the higher the population in this area the more successful the station will be in terms of ridership. The idea being that if people are within five minutes walking distance from the station they will use it more often. Of course this is a simplification as there are a plethora of factors that contribute to increased ridership in a TOD, including the way an area is designed to showcase/promote different transit options etc. The LRT Expansion LRT expansion is an ongoing initiative that the Figure 2 City of Edmonton has committed to wholeheartedly. The strategic objective of the city with respect to LRT development is outlined in The Way We Move, the master plan for transportation development. It mandates that the city will pursue development of the LRT to all of its sectors, striving to increase transit ridership and mode, and stimulate the development of compact, urban communities, more likened to that of the airport lands and Downtown (City of Edmonton, 2009, p. 46). Figure 2 shows the potential LRT expansion outlined in The Way We Move. Of particular interest to this report is the Northwest line, that is the route extending out from Churchill Station to the City of St. Albert. Note the solid blue lines represent routes that are already in existence, under construction or approved and funded. The idea is that downtown will be a central hub for all public transit, being the place where all lines converge and users can transfer and tavel to any section of the city they choose. 9

13 Details of Expansion The Norhtwest leg of the LRT is currently under construction up to and including the NAIT station. As of July 2011 crews are preparing for tunneling and building the MacEwan LRT station foundations (City of Edmonton, 2011, p. 1). The projected completion date for this expansion is April of 2014 and thus-far construction is progessing as schedualed. The route will be a mix of tunnel and street level service stemming from churchill station and continuing under the new Epcor tower to where it will emerge from under ground and stop in front of Grant MacEwan University (see figure 3). The city predicts that this expansion to NAIT will add approximately 13,200 weekday boardings to Edmonton s LRT network (City of Edmonton, 2011). Furthermore, they predict that once the entire line is complete that number will rise to approximately 45,000. The segment that extends to NAIT will be 3.3 km in length and those using it will be able to transfer at Churchill and travel in any direction they choose. The majority of users are projected to consist of MacEwan University students and staff, NAIT students and staff, Kingsway Mall shoppers and employees, Royal Alexandra Hospital patients, visitors and staff, and surrounding neighborhoods and businesses (City of Edmonton, 2011). Effect of LRT Development on Property and Business Figure 3 It is reasonable to assume that access to LRT increases property values and generally has a positive effect on the businesses in the surrounding area. According to research available on the effect of light rail transit on property values, this assumption is well supported. A study conducted at the University of California, Berkeley, considered the effect LRT had on proximate property values in Santa Clara County. The study examined rental rate trends, controlling for Highway access, economic phenomena etc. Results showed that properties within a ½ mile of a light rail station commanded higher lease rates and as the system matured a more profound benefit accrued (Weinberger, 2001). For the purposes of this report we are also concerned with why LRT affects property and business. A more recent report presented by Colliers International considers the impact of light rail transit on retail real estate and in the process breaks down what drives that impact. The study identifies the determining factors for retailers in choosing a location, as traffic and potential sales. This serves to fill in the gap between LRT development and increasing rent values and property prices. The presentation asserts that LRT service equals increased traffic, which leads to an increase in sales for the majority of businesses, increased rents and ultimately increased property values (Slatter, 2011). 10

14 However, it also acknowledges that there are certain firms that suffer. In certain circumstances properties can be caught in what would be considered unfavorable infrastructure changes. The incorporation of a train can limit access to a property or direct traffic elsewhere, forcing a business to adapt or rethink its model. For example, in this situation property could become more suitable for a condo development, as high traffic is generally undesirable in residential areas, but close proximity to transit is a major plus. The results of this research draw exciting connections between the redevelopment of the airport lands and the Downtown Business Community. The following analysis identifies the opportunities that may arise as a result of these connections and attempts to quantify their impact. The future LRT system as a whole is outside of the scope of this report and though it will be made reference to this analysis will focus on the section between the airport lands and downtown. Downtown Edmonton There are three major components of the question to be answered here in, two of which have already been explored, The City Centre Airport Redevelopment and Northwest LRT Expansion. The third component is Downtown Edmonton. To determine what impact the ECCAR will have on downtown, first, it is important to understand downtown, its composition and its function. According to the Capital City Downtown Plan, Downtowns such as Edmonton s contain the greatest mix of uses, concentration of people and activity, sense of identity and character and are the primary conveyors of a city s image (The City of Edmonton, 2010). It is also the highest concentration of businesses and consumer activity in the city with over 67,700 employees and 12,000 residents (, 2010). Downtown serves as an incubator for new products and business ventures, culture, activities, events, arts and architecture. A city s downtown core is the engine that moves it forward, facilitating growth in all other sectors and industries. If one thinks of the city as an ecosystem, the downtown core could be equated to the tree that provides shelter, nourishment and oxygen in the form of economic stability and stimulus, sustaining life and facilitating growth. With this analogy it is also possible to understand how the success of the core filters into the surrounding communities and vice versa, the bigger and stronger the tree the larger and more vibrant the ecosystem. The Downtown Business Association references five major categories in their promotion of the downtown core. In order to understand the downtown market conditions and composition we will briefly explore downtown through each of these categories. This will also provide a platform from which to compare the ECCA redevelopment with downtown and identify possible opportunities or challenges that may arise over the course of the airport lands redevelopment. Live 11

15 Downtown offers predominantly high-density housing choices. There have been over 40 residential developments in Downtown over the last 12 years, with over half of them high rise buildings (Downtown Business Association of Figure 4 Edmonton, 2010). Downtown is currently the second most populous neighborhood in the city behind Oliver, which is located directly west of the core. According to 2010 survey results 18% of residents are ages 25 34, 10% age 35 44, 14% age and 54% are 55 & over. The two major reasons given by residents for why they chose to live downtown are shown in figure 4, at 34% and 40% respectively. Furthermore, household composition for residents aged was found to be, 38% one adult, 30% two adults and 95% with no children under 18. This data suggests that people who are interested in living downtown are generally young childless and single professionals, professionals age without children and more mature professionals who have no children or who s children are now independent. New residential developments in the downtown core include The Quest, The Pearl, Mayfair Village and The Icon Towers. Some future projects offering residential units could include the proposed Arena District, development in The Quarters and or The Warehouse District. These developments will accommodate thousands more residents in the downtown core over the next number of years. Work Downtown is home to more than 15,500,000 sq. ft. of office Figure 5 space with a vacancy rate of 6.9% (Avison Young, 2011). This vacancy rate is down from in the second quarter of However, this number is set to rise upon Qualico s completion of the new EPCOR Tower on 104 th avenue and 101 St. in GE Real Estate will also be redeveloping EPCOR s current tower at the end of The new building is called First & Jasper and will complement the City s long awaited overhaul of Jasper Avenue from 97 th Street to 111 th street outlined in the Downtown Plan. Other developments that incorporate office and or retail space include, The CKUA Alberta Hotel building and the proposed Arena District. The retail vacancy rate in Downtown Edmonton is currently less than 1%. Indicating a large demand for retail property and encouraging growth in available retail space. Strong demand and a large amount of office and retail space in existence and on the horizon allow Downtown Edmonton to accommodate a host of major employers including the Government of Alberta, AIMCO, EPCOR, the City of Edmonton and many more. As was previously mentioned, 12

16 there are more than 67,700 people working Downtown, of those people 93% are considered full time employees (, 2010, p. 1). Figure 6 The employee demographics of the Downtown core were revealed by the Downtown Business Associations 2010 survey and are summarized in figure 6. They confirm that the majority of people working Downtown are between the ages of 25 and 54 and that the vast majority of these people live in the north or south ends of the city. Moreover, that the majority of employees have a household income of more than $100,000 per year. In 2006 the average household income in Edmonton for couple families was $87,300 and the average for single parent families was $38,900 (Edmonton Economic Development Corporation, 2010, p. 3). This merely indicates that workers in the downtown core generally earn a more substantial wage, which corresponds with the fact that a large portion of the population of downtown has higher education, 30% compared to 18% in the greater Edmonton area in 2009 (Edmonton Economic Development Corporation, 2010). Downtown is the most crucial and influential business community in the city employing more people and housing more businesses than any other community by a large margin. Shop Figure 7 As previously referenced the vacancy rate for retail space in the downtown core is less than 1%. It is the largest hub of retail business in Edmonton hosting more retail operations than Summerlea, which contains West Edmonton Mall. The commercial centers include 104 th street, Commerce Place, City Centre Mall, Jasper Avenue, Manulife Place, Rice Howard Way and more. On Saturdays between May and October the Downtown Farmers Market attracts as many as 24,200 people to 104 th street and this is just one of the many events happening Downtown that incorporate shopping, entertainment and or Food (, 2010). The demand by employees and residents for specific types of retail options is shown in figure 7. Developments that will offer more retail space have already been mentioned and will include, The CKUA Alberta Hotel Building, the new EPCOR Tower and the First & Jasper building. 13

17 Furthermore, the proposed arena district would offer a number of new retail locations by incorporating an entertainment district that will be composed of restaurants, lounges, coffee houses and some retail space (Low, 2011). Play Downtown Edmonton offers a plethora of entertainment options for all ages and tastes. It defines Edmonton s reputation as Festival City having approximately 1.2 million people attending various festivals in Sir Winston Churchill Square in It boasts over 40 lounges, bars, pubs and dance clubs that ensure there is a vibrant array of nightlife choices available. The proposed Arena District would add major sporting events and live performances that according to a recent DBA survey, both residents and employees would like to see more of (Downtown Business Association of Edmonton, 2010). The proposed Arena District calls for an arena to be operational by 2014 and would provide several new dining, retail and entertainment options. Downtown is home to a large art s district composed of such world-class venues as the Winspear Centre, Art Gallery of Alberta and The Citadel Theatre. Also on the list of venues are the Stanley Milner Library and the Shaw Conference Centre. The Royal Alberta Museum is set to join this elite group of attractions in the year 2015, effectively expanding the arts district all the way to 105 th Avenue. The aforementioned Alberta Hotel redesigned for CKUA radio will also be a big part of the art s district, as they plan to host live performances, showcase the arts and educate people with their elaborate collection of local and historical works (Regan, 2011). This reveals the incredible gravity of the Downtown Core with respect to arts and entertainment. There is no other community in the city that compares and the future promises to bring even more opportunity and excitement spurred by the Capital City Downtown Plan and a plethora of private investments. Learn In 2006 the Downtown Business association conducted a survey that showed there were more than 37,900 students and 3,700 staff attending learning institutions in the core over the course of the year. Since 2006 the University of Alberta has acquired space in Enterprise Square that hosts 12,000 students and 500 staff annually (, 2010). Grant MacEwan University has plans to further consolidate its services and increase its capacity, having now finished construction of the Robbins Health Learning Centre, which expanded their capacity by 2000 students. Downtown is connected via LRT to the University of Alberta s main campus and NAIT campus, once the northwest line expansion is complete in Furthermore, the NorQuest College is making progress in their efforts to expand in the Warehouse District, which will potentially bring 14

18 thousands more students downtown. The Stanley Milner Library is another important cog in downtown s learning machine with over 1.5 million visitors per year. The public library works closely with school systems stimulating the education of all age groups through a plethora of programs and events offered throughout the year. Analysis Ridership Projections It is clear that this northwest extension of the LRT network Figure 8 will increase ridership. What is not clear is by how much it will increase ridership and to which locations. As Shown in figure 9, the city has separated the existing LRT line into three distinct sections for the purpose of analysis and interpretation, Northeast, Downtown and South. The numbers included in this diagram correspond with the number of daily boarding s for 2010, both southbound and northbound, for each section. In 2010 an estimated 92,040 people boarded the LRT every weekday. Of those people, 27,850, exited at one of the stations in the downtown core, revealing that approximately 30% of users are utilizing the train Figure 9 to access downtown. The section of train being constructed out to the airport lands, as mentioned above, is known as the northwest line. According to recent projections from Transportation s Policy Implementation and Evaluation, the airport lands development will add approximately 4,300 southbound boardings per weekday to the aforementioned 13,200 boardings of the northwest line. This projection is based on a Regional Travel Model and is only a rough estimate that is subject to change; particularly as land use and the number of LRT stations to be built on the development is finalized. However, this may well be a conservative estimate as the target population of the development has risen from the 24,000 used in the model s projections to 30,000 and plans now include more than one LRT station. 15

19 The question remains, where will these 17,500 people be going and how many of them will be going somewhere in the downtown core? Projected Effects Access to Capital When considering the population of residents in the downtown is approximately 12,000 and the number of employees is approximately 67,700 an increase in traffic of 17,500 people, real or realative, is a substancial amount. The real number in this case would refer to the actual number of people out of those 17,500 who are traveling to a station downtown. It should be noted that a number of these people would already have been downtown employees. However, they will now be approximately 8 minutes away from Churchill station via LRT, which is only three minutes farther than residents traveling north from Grandin station (Policy Implementation & Evaluation Section, 2011). The 2010 employee survey administered by the DBA reveals the importance of LRT to downtown employees. 31% and 29% of downtown employees live in north and south Edmonton, respectively. Only 11% are in the west, 6% in Sherwood Park, 5% St. Albert and 7% in downtown itself. Thus, it would apear that downtown employees are attracted to areas with access to the LRT system. This data suggests that the airport lands will be an attractive propect to individuals who work downtown and could end up essentially being an extention of the downtown community. Providing people from the extremities of the city an attractive alternative to pure suburban living and drawing a new consumer market segment to Edmonton that will likely resemble European housing markets. It is still unclear what services will be available at the airport lands. However, the design team aspires to create a connection with the kingsway shopping mall and are accutely aware of the importance of creating harmmony between the development and its surounding communities, including that of downtown (Johns, Executive Director of Design, Group2 Architecture Engineering, 2011). Considering the uniqueness, diversity of attractions and ever increasing opportunity for employment downtown it is difficult to argue that residents of the ECCA will not be an extention of the core in some way. A recent survey of the Century Park LRT station found that 2/3 of the people who board at Century Park make downtown there final destination. Although it must be considered that Century Park and the airport lands will have their diffenrences, design elements suggest it is reasonable to compare the two. The design elements show it will attract a similar demographic, having lots of park space, the ability to garden and it will also be separated from downtown by a sizable shoping center, like Century Park. Furthermore, it is unclear at what point northwest expansion of the LRT will be completed, as the city s next priority is the southeast line out to Mill Woods and thus for the purposes of this report the ECCA staion(s) is considered the end of the line. For all of these reasons it is assumed that 2/3 is a reasonable approximation for the proportion of people riding the 16

20 northwest LRT line up to and including the ECCA station(s) who will make downtown their final destination. Thus, it would follow that once the northwest line is complete and the ECCA lands are fully populated there will be a total increase in the flow of traffic into the downtown core, via this section of LRT, of approximately 11,600 (17,500*(2/3)) people every weekday. In order to assign a dollar value to the impact of increased traffic we will consider Real Personal Disposable Income Per Capita in Edmonton and the LRT ridership numbers discussed above. According to the EEDC, in 2009, Real Personal Disposable Income Per Capita in Edmonton was $28,460 (Edmonton Economic Development Corporation, 2010). The same report revealed that the average expenditure on clothing per household in 2008 was $3,461. If we assume that every household has at least two adults who spend money on clothes, a conservative estimate for average individual expenditure per person would be half of that or $1,731. Therefore, the combination of the ECCA redevelopment and LRT expantion offers dowtown the opportunity to capture roughly an additional $330,136,000 in disposable income or $20,079,600 in clothing expenditure alone that will come in via LRT every year. Energy Use If the design team is successful in developing the district heating system through which they plan to heat certain institutional buildings in the downtown core, downtown could become far more energy efficient. The availability of these technologies will, by virtue of supply and demand, lower their cost, making them a more viable option for business owners and property developers. Moreover, it has the potential to increase awareness among consumers, which puts pressure on business owners, who in turn put pressure on developers and property owners to meet higher standards of energy use. Furthermore, as consumers and tenants begin to value, for example, LEED certified buildings, landlords and developers have the opportunity to recoup some of the costs of retrofitting in the lease agreement or sale price. Economic Stimulus A development of this magnitude will undoubtedly benefit the city s economy as a whole. Providing jobs and purchasing materials will increase the velocity and volume of money adding momentum to the economy. In the construction stages of development downtown hotels may see an increase in activity and also upon completion as people from around the world will likely come to observe how the community operates and study the development and its process. The housing and rental markets could also see increased demand coming from laborers as the LRT link is completed. Thus, tourism will benefit but it will not be the only industry to see an increase in business volume. Companies that deal in sustainable technologies may seek office space downtown, venture capital or financing if the bulk of their operations move to Edmonton, as the design places a major 17

21 emphasis on these technologies and will likely require their components in large quantities. Moreover, we may see local companies expanding into the industry or new companies emerging, supported by our financial district. Things as simple as concrete and other materials will likely increase in price as the quantities demanded rise well beyond current levels. Developers with offices downtown, such as Qualico, may require more office space as they acquire more staff if they are involved in development and have the opportunity to expand. Finally as individuals earn more money they will likely spend more money and businesses in the downtown core, across all industries, will have the opportunity to capitalize on that available capital. Workers involved in the development may choose to live downtown or come downtown for entertainment, dinning and or other social activities, if businesses and property owners can identify their ideal product attributes and attract them to the core. Property Market Demand Market demand concerns stem from concerns about the Edmonton housing markets ability to support an increase in supply of both residential and commercial property. Downtown Edmonton continues to build both residential and commercial buildings with Figure 10 the ultimate goal of making downtown more vibrant and attractive to investors. Primarily, it offers high-density residential towers and office towers that incorporate retail space (Downtown Business Association of Edmonton, 2010). The ECCA redevelopment will offer medium to high-density residential property as well as lighter commercial space. The projected growth of the city of Edmonton from the year 2009 to the year 2044 is 359,000, according to the Economic Impact Assessment commissioned by the City of Edmonton on the airport lands redevelopment (Applications Management Consuling Ltd., 2009). The population of the airport lands will account for approximately 8.35% of that growth over the duration of the forecast period. Furthermore, the design team has done research on the property absorption rate of Edmonton and plan to develop the property at a rate that accommodates growth in other areas of the city (Johns, Executive Director of Design, Group2 Architecture Engineering, 2011). This data suggests that general market demand will not likely be an issue for residential development. The demand for office space is difficult to predict as it relies heavily on the state of the economy, but also fluctuates in accordance with particular sections of the economy. In Q2 of 2011 overall vacancy rates where strong, particularly in the core and private investors are moving forward with certain development projects, indicating a confidence in future growth in the demand for office space. A more specific concern with respect to market saturation is competition between the ECCA redevelopment and the Downtown Core in the residential property market. Any market, in which more than one product is introduced, will have some level of competition. However, within any 18

22 particular market there also exits specific market Figure 11 segments. In this case the design and vision of the ECCA lands and the demographic composition of downtown residents suggest the two communities primarily occupy two separate market segments. That is not to say there will not be some give and take. It was mentioned above that downtown residents tend to be childless and primarily live downtown to be close to work, shopping and services. It would follow that as they begin to have children they may migrate to the ECCA development unless the downtown real estate community can come up with better ways to accommodate that type of consumer. However, children that grow up on the airport lands and spend their formative years traveling through downtown to Grant MacEwan, the University of Alberta or NAIT, may be more likely to move downtown once they have left home. In this case the two products would behave more like compliments than substitutes, feeding off of each other s success. The uniqueness of the Downtown core was described earlier in this report; it reveals that downtown is not just a community, but also a lifestyle. The same will likely be true of the airport community; however the information available suggests it will be a very different community and a very different lifestyle, the likes of which possibly even the world has never seen. Moreover, when the economic impact assessment commissioned by the city considered where population growth at and around the airport would originate. It determined population shifts resulting from redevelopment would total approximately 33,300 people. Of those people approximately 28,300 would be reallocated from growth projected to occur in other areas of the city and 5,000 from elsewhere in the Edmonton region (Applications Management Consuling Ltd., 2009). This shift in population growth is shown in figure 11, coming from areas marked with red to areas marked with green. Thus, based on the information reviewed, this report would conclude that competition for residential development between the ECCA community and Downtown will be less than significant. Furthermore, projected growth will more than accommodate what is currently planned for development. Suburban growth will not benefit from the redevelopment; however it will be responsible for approximately 54% of total population growth over the forecast period (Applications Management Consuling Ltd., 2009). Centre of Excellence The redevelopment s focus on sustainable technologies and renewable energy presents an opportunity for Edmonton to play a more major role in their development, manufacture and or distribution. Moreover, having the Northern Alberta Institute of Technology (NAIT) campus on the 19

23 doorstep of the airport lands is the ideal scenario for this technical college to play a lead role in making Edmonton an international hub of sustainable technological development. NAIT is excited about the opportunities for expansion provided by the airport redevelopment (Engleder, 2011). They already have programs that deal with sustainable technology and see the airport development as an avenue through which to add more practical application and further their existing programs. For example, they currently offer instruction on sustainable housing development. Access to Skilled Labour Access to skilled labour will be a function of NAIT and other educational institutions using the airport development as a training facility or case study. Furthermore construction and development will provide invaluable experience to every industry that is involved with the project including, architects, urban planners, plumbers, electrical engineers, lawyers etc. Experts will be flown in from around the world to contribute their expertise. The legacy these experts leave behind will be the expertise that is passed on to a new generation of Edmontonians and it will shape the city s architecture and urban design for years to come. Increased Property Values As depicted in the figure to the right the Figure 12 incorporation of LRT service tends to increase traffic, which increases sales, rents and ultimately property values. However, this increase in traffic comes not only from LRT expansion, but also as a result of increasing population density. If the development of the airport lands succeeds in shifting Edmonton s focus from suburban to urban development the increase in density will make it easier for the majority of businesses to survive and thrive. More customers due to an increase in the consumer base generally means more sales and thus a more desireble location which ultimately increases the property value. In higher density the majority of businesses have more customers with fewer locations and thus less overhead and more revenue, allowing higher rents and achieving a positive net benefit for all parties involved. As competition increases this reduction in costs could also be transferred directly to the consumer as a low price, high volume business model becomes a more viable option. Sustainability The environmental aspect of the ECCAR project has already been discussed in this report. However, the attention it draws to environmental issues may offer Downtown an opportunity to communicate how sustainable it is compared to most other communities, as a result of its 20

24 composition. Awareness and availability of sustainable technologies brought about by the ECCA Redevelopment could also play a key role both in motivating and facilitating the transformation of Downtown into a more sustainable community. With a population density of approximately 7,500/km 2 (12,000/1.6km 2 ) compared to the city s population density revealed by Statistics Canada in 2006, of /km 2 the downtown community is arguably, by virtue of its composition the most sustainable development in the city (Statistics Canada, 2010). A number of environmentalists/scholars have been advocating the sustainability of high-density urban development for some time. For example, David Owen a longtime author for the New Yorker and editor of various publications writes in his book, Green Metropolis: Why Living Smaller, Living Closer, and Driving Less Are the Keys to Sustainability, about the environmental impact of highdensity communities like New York in comparison with lower density cities and states. He argues that from a per capita perspective higher density communities are far more sustainable and offer important insight into the future of sustainable development (Owen, 2009). Perhaps the most important argument in favor of high-density is the viability and usage of public transit limiting the use of automobiles. Reducing carbon emissions is critical to achieving a sustainable lifestyle as the availability of fossil fuels is finite and thus the use of fossil fuels is, by definition, not sustainable. Unfortunately the majority of suburban households tend to require more than one car. Higher density also allows for more tax revenue to be allocated toward smaller scale infrastructure. In other words shorter pipelines, less expansive sewer systems, more efficient school systems and fewer roads etc. also make higher density more economically sustainable (Owen, 2009). The City Centre Airport raises the issue of sustainability and should it motivate consumers to seek out more sustainable living, Downtown Edmonton will have an opportunity to capitalize on the sustainability of dense urban centers, using it as a tool for attracting and retaining businesses and residents. Development A number of different ways in which the ECCAR will effect development and design in Downtown Edmonton have already been discussed. However, perhaps the most direct influence is yet to be considered. The closure of the last operational runway at the municipal airport will bring with it the end of Edmonton Zoning Bylaw 12800, which under the Airport Protection Overlay (APO), provides for the safe operation of the ECCA through the federal regulation of building heights and land uses in the vicinity of the Airport and the four runway approaches. (City of Edmonton, 2008, p. 3). The municipal airport calls for a number of different Figure 13 21

25 building restrictions including the absolute, runway approach and NAVCAN restrictions. In figure 13 the downtown core has been marked in green and the red circle represents the absolute building height limit area while the orange rays represent the runway approach areas. The absolute building height limit restrictions prohibit the construction of any structure higher than m above sea level. This translates to approximately 145 m or 40 floors in the downtown core, depending on base elevation. A number of other restrictions limit the height of buildings to as low as twelve stories on Capital boulevard and 108 street. However, height restrictions associated with runway approaches have changed over the years as runways have been altered to accommodate airport usage (Milley, 2011). Conclusion Implications for Business Increased Traffic via LRT An increase in traffic via LRT will increase the sales volume of nearby businesses. The city owns retail space within the pedway system in a number of locations that will be more and more feasible for retail business operations as the LRT expansion approaches completion. The increasing density of the Downtown population will amplify this effect. Businesses surrounding areas such as Churchill Station where passenger will transfer to other trains or buses, particularly those that sell food or other convenience items will likely see increasing revenues. Growth in TODs will decrease the city s dependence on automobiles, lowering the cost of parking for employers as fewer employees use their cars to get to work. This could ultimately lower the market value of downtown parking lots providing more incentive for their development. Eventually, parking lots will be developed into residential or commercial buildings opening up much needed space for street level retail businesses, animating the streets and making downtown a more vibrant community. The removal of building height restrictions will further contribute to the changing trend in development. The ability to construct taller buildings will increase the profitability of skyscrapers and raise the capacity of the downtown core, further encouraging densification. It has also been argued that the ability to build upwards will spur urban design that further encourages people to interact at street level rather than underground. However it must be taken into consideration that a major factor for downward development in Edmonton is the harsh climate within which it operates for a good portion of the year. That being said the removal of height restrictions will encourage higher density development, which if accompanied by increasing demand, in the long- 22

26 term, will contribute to the vibrancy and prosperity of the downtown core and have a lasting impact on architecture and design. Market for Sustainability The emphasis placed on environmental sustainability is likely to attract people who value similar initiatives. There will be an increase in the demand for sustainable products and following for businesses that emphasize sustainable business practices. This demand will not likely be limited to consumers as employees may seek employment with companies who have a reputation for such Corporate Social Responsibility. Transportation As the airport community inspires people to engage in alternative modes of transportation, creating a connection between the river valley and the airport community that favors cycling and walking or running, LRT and other forms of public transit. There will be opportunity for businesses that cater to such activities. For instance, there are currently no bicycle shops within the Downtown core. Also, engineers and maintenance workers for the LRT etc. will be in increasingly high demand. Property Values and a Focus on Urban Development As property values increase, particularly along the LRT line, rents will also gradually increase. However, the increase in property values is a reflection of an increase in potential revenue and should more than compensate for increases in rent, as revealed by the aforementioned research done by Colliers International. The majority of businesses experience net gains on account of LRT expansion (Slatter, 2011). Similarly, businesses experience higher revenues at low costs, as development shifts from suburban to urban. As the Figure 14 population becomes more and more dense businesses will have access to more customers per location allowing them to operate more efficiently or expand. Businesses in the areas surrounding the Churchill LRT station and the northwest line should prepare for increased foot traffic, sales, property values and or rents. These are the areas in which LRT expansion combined with the ECCA Redevelopment will create the most opportunity. 23