Innovation

Serving the Condo Forest Dwellers

Downtown populations are soaring in Canada's biggest cities, creating a hungry market for everyday products and services. But business has been slow to meet the need.

Written by John Lorinc

According to Jeff Wong, who owns Swirl Wines in Vancouver’s Yaletown, the demographics of the highrise neighbourhood around his store and those of the typical B.C. wine consumer fit together like, well, a nicely chilled Pinot Grigio and some fresh calamari. Wine buyers, he says, have plenty of disposable income and tend to be either in their childless 30s or their empty-nesting 50s and 60s. Which, as it happens, pretty much describes Yaletown’s thousands of condo dwellers. Business has flowed freely since the moment Wong opened his store six years ago.

Wong is hardly the only entrepreneur to glom on to the potential in all those towers springing up in downtown Vancouver, Calgary and Toronto. Two years ago, the Kinder College Early Learning Centre, a private daycare, took over a former nightclub in Toronto’s Entertainment District. It was a telling change in the once hard-partying area where, over the past few years, condo buildings have been sprouting on an almost monthly basis. Other neighbourhood-oriented businesses also have moved in, among them mini-supermarkets like Fresh & Wild, as well as dry cleaners, convenience stores, pubs, neighbourhood-style eateries and, of course, more coffee shops. Janice Solomon, executive director of the Entertainment District business improvement area (BIA), points out that the new residents, many of whom don’t own cars, have adapted their shopping patterns accordingly: “They’re going to shop for fresh produce a few times a week instead of the weekly major shop” at a supermarket.

Between 2006 and 2011, according to a recent TD Bank report, the population of Toronto’s downtown core jumped by more than 16%, largely due to the fact that 50,000 condo units have been completed south of Bloor Street since 2000. About 70% of the new homeowners belong to Generation Y: now in their 30s, living on their own (finally!) and apparently enjoying downtown life before settling down.

But the fact that shops like Vancouver’s Swirl are swamped with highrise-dwelling customers suggests there’s still plenty of unmet demand and, therefore, opportunities for entrepreneurs. Sherry Cooper, the recently retired chief economist at BMO, notes that in Manhattan, where high-density apartment living has been the norm for decades, city blocks are lined with food shops, dry cleaners, locksmiths, hardware stores, hair dressers, nail boutiques and flower stalls. What’s more, many of these businesses are set up to provide services to a time-starved population, such as preparing high-quality take-out meals. “Same-day delivery for groceries, wine, liquor,” she says. “You can get same-day delivery for furniture!”

In newer condo clusters, “the convenience factor has a long way to go”

While Cooper allows that the condo neighbourhoods in downtown Toronto are very new, she notes, “The convenience factor has a long way to go.” In some parts of the financial core, which has seen its fair share of residential development, Cooper (who recently moved downtown) says it’s tough to find a drugstore open on weekends. She points out that downtown dwellers now include moms with small children, but the traditional retail zones, such as Toronto’s Eaton Centre and the subterranean malls beneath the office towers, offer mainly destination shopping venues, such as upscale clothiers, rather than places to buy staples such as light bulbs and cat food.

The retail patchiness isn’t unique to Toronto’s condo forests. Ross Moore, director of research for CB Richard Ellis Canada, says that in Vancouver, retail has been slow to take root in some newer mid- and highrise neighbourhoods, such as Coal Harbour, built on the former railway lands overlooking Burrard Inlet, and the Olympic Village district on south False Creek. But, he adds, “I’m not hearing of people crying out that there’s absolutely nothing.”

One reason: Vancouver’s condo district is home to a smaller-format Costco, located at the foot of one very tall tower, directly across the street from a SkyTrain station. It has been successful at intercepting condo dwellers who might otherwise drive out to malls in Burnaby . “My understanding is that [the owners] are very happy with that store,” Moore says.

The evolution of the market for local services in Yaletown points the way for other new neighbourhoods and the entrepreneurs who serve them. In the 10 years that Gary Forman, project manager for the Yaletown BIA, has been living in the area, he has watched the retail and service landscape evolve to meet the needs both of tourists and residents, including a growing contingent of young families drawn by a new elementary school. “That school has been filled to capacity since the day it opened,” he says.

Apparently, Jeff Wong may soon add exasperated parents in need of a post-bedtime drink to his list of sated customers.

Originally appeared on PROFITguide.com