City Building

What’s Next for Main Streets Resulting from COVID-19

On April 29, we presented a webinar with the Urban Land Institute Toronto on the “Future of Main Streets.” We asked our expert panel — composed of John Archer (360 Collective), Pauline Larsen (Downtown Yonge BIA) and Dr. Tony Hernandez (Ryerson University’s Ted Rogers School of Management) — questions about the impact of COVID-19 on local commercial corridors, policies to support businesses and workers, and the post-pandemic recovery of main streets.

During the webinar, we received excellent questions from the audience, many of which we were unable to address because of time constraints. So we circled back with our panelists for answers to some select questions and are providing the responses here.

If you’d like to watch this webinar in full, and others in the series visit our Future of Cities series, visit our Future of Cities page.

>> New Resource: be sure to visit Bring Back Main Street, just launched by the Canadian Urban Institute. Bring Back Main Street is “a nationally-coordinated research and advocacy campaign to ensure the people, business and organizations that that call Canada’s main streets home can recover and emerge from the crisis more resilient than ever.”

John Archer

Chief Development Officer, 360 Collective

Q: Do you think that landlords, coming out of this, will be more willing to experiment with leasing arrangements in order to keep their tenants? Ex. flexible or shorter term leasing arrangements, leases with base fees and a proportion of revenues, etc. etc.?

I think [a participant] did ask this one; Tony Hernandez gave a great response, especially around both landlords and tenants working together and sharing the risk in the lease arrangement so that both have some skin in the game.

My response is that yes, we will begin to see changes in leases, lengths, definitely pandemic clauses are now being added to new leases as well as what to do in rent deferral situations. I think a positive outcome is that more landlords and tenants are talking to each other more. And realizing that each has pain points and how to find a mutually agreeable solution. There will always be absentee landlords and others that will not be sympathetic.

Q: Will we see a change to MPAC and the highest/best use taxation policy [since many businesses are negatively impacted by the shutdown]?

Highest and best use assessment can cause huge increases in assessment in neighbourhoods where property sales reflect their value as redevelopment sites. This has caused major increases in property tax for businesses in these neighbourhoods, although the City of Toronto has somewhat mitigated the impact by putting a 10% per year cap on property tax increases related to increased assessment. The Main Street Study explored this issue and offered some potential approaches to better insulate small businesses from the impact of property speculation on their tax bills. It would certainly support business recovery post-COVID-19 in the impacted neighbourhoods if the City of Toronto and Province advanced action on this front.

>> For more on the commercial property taxes issue, visit our Taxed Out page

Dr. Tony Hernandez

Director, CSCA and Professor, Ryerson University

Q: Lots of focus has been on food service and retail shifting to online or distributing products through pick up or delivery. What about those businesses that cannot do curbside, or businesses that rely upon in-person experiences (ex. gyms, movie theatres, music venues)?

Non-essential businesses that do not have other means (i.e., online) to deliver goods and services to customers have essentially been shuttered. There are examples of movie theatre chains promoting their streaming digital media services (ex. Cineplex), but for many businesses, revenues have dropped to zero. Large gatherings at music concerts will be one of the last types of activity allowed as part of re-opening efforts; for the most part, the summer season of planned music concerts have essentially been cancelled. Some bands/artists are posting songs and older concerts online to stay connected to their fan base, but the ticket revenue is non-existent.

Q: While increasing businesses’ online presence is helpful especially during these times, how do a greater online presence and more online sales impact in-store sales in the long-run? How do we balance keeping businesses afloat through online sales vs maintaining a strong physical presence and main street character?

The need to balance online with physical has been a growing challenge for retailers of all sizes, big and small, chain and independent. The best way to address this is from the consumer perspective; how does the consumer want to shop? Ultimately, retail and service is about meeting consumer demand. The temporary shutdown of physical operations for many retailers has forced the move to online and associated delivery. Retailers are having to learn fast to create the right online platform and capacity to meet online demand right now. In many ways this has accelerated trends in online retail adoption by consumers. As we emerge from the crisis, we are likely to see an increase in online demand, although not a landslide change, and an re-evaluation of how store space is used as either transactional versus experiential space. Physical shopping will return over time, but with an increased awareness and adoption of online channels.

Note: we also received questions about the effectiveness of recent government policies and funding opportunities; we declined to address these because we haven’t yet seen the full impact of government interventions and their net outcomes.

Image of Queen Street West by Vik Pahwa, 2018.