Economic Development News & Insight


The Higher ED Blog: Can residential development contribute to downtown revitalization?

Tara Vinodrai / August 31, 2015

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The Higher ED Blog: Can residential development contribute to downtown revitalization?

This article is the first in our Downtowns: Onward and Upward series, which explores downtown revitalization issues and strategies.

In the urban age, academics, policymakers and practitioners alike have noted the importance of cities – and specifically – the need to rejuvenate and revitalize their core areas. Studies have documented the decades of downtown decline that North American mid-sized cities have experienced, due to changing demographics, out-migration, decentralization of business activity, and the shifting locational preferences of businesses and residents. Revitalization strategies typically include brownfield redevelopment, public transit investments, commercial development, cultural enhancements, attracting public-sector and post-secondary institutions, and residential development plans. That last item, residential plans, are one of the most common elements of downtown revitalization strategies in Canadian cities, yet they are often overlooked in the scholarly literature.

Sarah Michels, a recent graduate of the University of Waterloo’s Local Economic Development Program, addressed this gap in her major research paper, Does Residential Development Positively Contribute to Downtown Revitalization? She examined this question by looking at the City of Kitchener, an interesting case as it is widely viewed as a success within Ontario’s economic development and planning circles.

Kitchener’s renaissance

Downtown Kitchener—for most of its history—has been a centre of business and commercial activity. However, Kitchener has not been immune to downtown decline, driven by the relocation of retail and residents to suburban locations, and manufacturing plant closures. By the mid-1990s it was clear to politicians that the downtown was in trouble.

The City implemented several initiatives and strategies to tackle the problem, starting with the Mayor’s Taskforce for Downtown Kitchener (1995) and Compass Kitchener (1999), a community-led initiative. These initiatives led to the investment of over $80 million into projects and programming, but it was clear that residential property developers were less interested in investing due to the negative image of the area. Further strategies included the Downtown Strategic Plan (2002-2003), Urban Investment Strategy (2004-2005), Kitchener Economic Development Strategy (2007-2010), KEDS II (2011-2015) and the Downtown Kitchener Action Plan (2012-2016), all of which focused on both business and residential development. To support  these strategic plans, since 1995 the City of Kitchener has used a suite of financial incentives (e.g. exemption for parkland dedication fee, three-year 50% tax exemption; planning application and building permit fee rebates; development charge exemptions; upper-story renovation program); pursued collaborations, partnerships, and community engagement; and – more recently – engaged in brand development and marketing.

Sarah’s interviews with local officials all indicated that these policies and strategies were critical to success. And there has unquestionably been residential development (and population growth) as a result. From 2004 to 2012, the City of Kitchener issued building permits for 321 residential units in the downtown, as well as an additional 824 residential units in surrounding neighbourhoods, including notable brownfield condominium developments, such as the award-winning Kauffman Lofts.

But have these actions and strategies had any measurable impact on the downtown? Sarah reviewed data from the Canada Mortgage and Housing Corporation (CMHC), the City of Kitchener’s AMANDA database, and the Municipal Property Assessment Corporation (MPAC) database to find out. Between 2004 and 2012, the total value of residential properties in downtown Kitchener increased by 37 percent and there were marked improvements in vacancy rates. In 2004, the downtown vacancy rate was higher than the rest of the city; but by 2012, it has dropped to well below the city rate (Table 1). Sarah found similar improvements on other key performance indicators covering income, housing, education, and labour force activity. In each case, the downtown improved its performance over time, and began to outperform the city on some metrics (Table 2). These results provide some indication that residential development can contribute positively to downtown revitalization.

Table 1

Residential Rental Vacancy Rates (Source: CMHC)

Residential Rental Vacancy Rates (Source: CMHC)

Table 2

2006 and 2011 Community Well-Being Index Scores

2006 and 2011 Community Well-Being Index Scores

Kitchener’s renaissance is instructive, especially as smart growth policies, such as Ontario’s Places to Grow, continue to encourage downtown revitalization. Certainly, residential development is only one part of the story; but it has been important for bringing residents back to downtown Kitchener. If there was one lesson to be taken away, it would be that perseverance is critical. Downtown revitalization does not happen overnight. The revitalization of downtown Kitchener has happened over two decades, with some clear strategies and critical policy interventions along the way.

About the authors

Dr. Tara Vinodrai is Director of the Local Economic Development graduate program at the University of Waterloo and Assistant Editor of the Higher ED Blog. She is an expert on urban and regional development, innovation and clusters, and the creative/cultural economy. Her Twitter handle is @TaraVinodrai.

Sarah Michels completed her Major Research Paper under the supervision of Dr. Mark Seasons from the School of Planning at the University of Waterloo and currently works for the Federal Economic Development Agency for Southern Ontario.

About the series

Higher ED: Insights for the Next Economy is a platform for students, guest speakers, staff and faculty of the University of Waterloo’s professional and graduate economic development programs to share knowledge with the field at large. The series takes works destined for an academic audience and reworks them into a fresh, easy-to-digest blog article.

Established in 1988, the Local Economic Development program is the only master’s program in Canada devoted solely to local economic development. It offers a balance between theory and practice by combining coursework, a major research paper, an internship, and weekly seminars featuring guest speakers. Students are prepared for careers in local, community, or regional economic development.

The Economic Development Program is a nationally-accredited provider of professional training. It delivers certification programs and seminars that offer a deep understanding of the Canadian context in a convenient block format. Peer learning is combined with informative lectures and practical case studies to provide dynamic instruction that is beneficial for junior and senior-level practitioners.

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