Rethinking Retail Land Portfolios

The Infrastructure Institute at the School of Cities, University of Toronto, partnered with the Education and Research group at Esri Canada to investigate the potential for redevelopment of underused private land.

While public land is the obvious choice when it comes to finding sites for affordable housing, what is the potential of private land portfolios? Can we balance the interests of private landowners with public ones of affordable housing and other uses?

We asked these questions in our study. Taking just six major retail chains that operate across Toronto, we used Esri ArcGIS software to generate hypothetical development scenarios on their underused sites. The results were stunning, revealing enormous potential to build housing and to provide spaces for social infrastructure.

The City of Toronto is in the midst of a housing crisis, with a shortage of larger sized units, affordable housing, and critical public services. The COVID-19 pandemic has magnified the issue, resulting in an urgent need to dramatically increase the supply of housing.

To date, the City has taken a significant policy response to help expedite the redevelopment of publicly-owned lands. Toronto's Housing Now program and Create TO agency are prime examples that will fast-track the building of 10,000 housing units, including 3,700 affordable rental units.

Often overlooked or downplayed, however, is the potential for the rapid redevelopment of privately-owned land portfolios.

Privately owned land is a largely untapped resource, with many private landholders owning multiple sites that constitute underused land - that is, property that has more development potential than is currently being utilized. Prime examples include large, single-storey grocery and big box retail stores with substantial surface parking. These sites have the potential to be redeveloped as transit-oriented or mixed-use projects, with the existing retail use profitably rebuilt into buildings that co-locate market and affordable housing, retail, and social services.

A few high-profile landowners including Choice REIT have already begun the process of redeveloping some of their underused sites. This is a trend that is just getting started (see below).

With the City’s target goal of 44,000 affordable units (40,000 rental, 4,000 ownership) to be met by 2030 under the affordable housing requirements stipulated under the new Inclusionary Zoning Policy, public lands alone will not be enough to deliver the needed housing. Moving forward, harnessing the development potential of large private landowners will be crucial in supplementing the delivery of affordable housing supply and the creation of complete communities with the essential social infrastructure.

We used Esri software to analyze and identify privately owned sites with high potential for redevelopment, and explore the extent of the development potential. Our approach comprises five steps which are summarized below.

After generating the massing in ArcGIS Urban, we analyzed the findings and have summarized them in this section.

Redevelopment of these 65 sites alone could generate a staggering 7.35 million m ²  of new development, including 5.51 million m ²  of new residential floor area, which translates to approximately 68,576 residential units. Additionally, around 700,000 m ²  of greenspace, 300,000 m ² , and 1,000,000 m ²  of amenity and non-residential uses like retail, social purpose, and community uses could be realized.

There is a strong opportunity to direct development towards larger family sized units which are currently in short supply. Even if only 10% of units were mandated to be 3+ bedroom units (below our analysis' 15%), over 6,000 units could still be generated with 3 or more bedrooms.

Using Toronto's Inclusionary Zoning Policy to calculate the number of affordable units, it is clear that redeveloping underused private sites can significantly contribute to the City's affordable housing targets. Even if 10% of the 68,576 units were to be affordable housing units, this would produce around 6,858 units - a considerable portion of the City's goal of 44,000 affordable units by 2030.

Of the 65 sites, 48 were large enough to host multiple buildings, some of which would require a formal master planning process if developed. Such sites provide ample opportunity to foster complete communities through investment in public realm improvements, public infrastructure, and community amenities.

Our analysis determined that 45 of the 65 sites already satisfy multiple criteria that make them suitable for redevelopment, including preferable existing zoning conditions, minimum ideal lot dimensions, and within close proximity to rapid transit.

Despite the significant development potential from these six retailers alone, hindrances in the current market and the planning process could prevent its timely realization. The pace of redevelopment is slow and the inclusion of larger family sized units and social infrastructure uneven. Sites that ultimately developed still favour smaller-sized units and are targeted at the highest possible market rates for rentals and ownership. Public policy and a pro-active approach are needed to accelerate the redevelopment of underused land into mixed-use projects that truly support deep affordability and complete communities. Six potential incentives are explored below.

Our study has shown an impressive level of development from just six private landowners alone. Imagine the housing, services, and public benefits that could be delivered if many major landholders in the city were to accelerate the redevelopment of their underused sites!

Proper policy and incentives are required to motivate private landholders and accelerate development and partnership opportunities, including on smaller sites that collectively comprise an abundance of land. As the Inclusionary Zoning Policy is rolled out in Toronto, there is an opportunity to pair it with other incentive programs like those outlined in the previous section.

Lastly, there also needs to be an intentional mindset to integrate social purpose uses into redevelopment, ensuring that communities benefit from the transformation in their neighbourhoods. This can be realized through mutually advantageous collaborations between private, public or non-profit partners that result in innovative creative mixed-use buildings. Ultimately, collaborative partnerships will be key to moving forward, enabling private landowners to deliver significant housing supply, including affordable housing, in ways that can accelerate, co-finance and generate broad public support.