The flight from cities like Toronto was supposed to be temporary, but it might not be. Despite armies of Toronto real estate agents claiming on social media that people are returning, that doesn’t seem to be the case in July data. Using Google mobile traffic, we found Toronto workplaces have a third less traffic than usual. That’s before even accounting for the population growth. At the same time, the province’s small towns are killing it — with just a minor decline in workplace traffic. Some are even seeing retail more than double pre-pandemic traffic, as workers settle into their new digs.
About Today’s Data
Today we’re comparing Ontario’s pre-pandemic traffic with July 2022. The data is based on anonymized Google mobile phone traffic, so it isn’t car-based. We’re looking mostly for workplace data, so we also isolated this to weekdays. We then averaged the daily deviation from baseline for the month. Google’s provided baseline is the first 5 weeks pre-pandemic starting Jan 3rd. You know, when we were still going to workplaces like suckers.
The data sounds complicated but it’s super straightforward in the chart we prepared. Positive numbers mean increased traffic for the average weekday in the month. Negative traffic means decreased traffic compared to the baseline. See? Easy, peasy.
One thing to keep in mind that might not be obvious is small changes are likely noise. It’s summer, so more people are probably taking their vacation days now rather than in the winter. At the same time, the population has been booming so in theory it should make up for the vacations. That in mind, small declines are good — big increases are better. Sharp drops are concerning and may indicate cities are struggling to return to the norm.
This is a real estate news site, so let’s spell it out: Increases might be good for medium-term demand and declines are bad for medium-term demand. If more people are working from home, there better be a heck of a lot to do to keep people paying a premium. More on that later.
Ontario’s Big Cities Still Haven’t Seen Workplace Traffic Recover. Not Even Close
Only one City across Ontario showed an increase in workplace traffic. That was Bruce Country, which is up 10% at workplaces compared to the baseline. Only small average deviations were seen in Parry Sound (-0.4%), Muskoka (-5.1%), and Haliburton (-8.1%). The drop is small enough for vacations and work from home (WFH) to explain them. It’s also worth noting these markets have seen some of the fastest price growth in Ontario. Millennials and investors competed for whatever they could buy in these regions.
Ontario’s Biggest Cities Are Nowhere Near Seeing Workplaces Recover
The average percent deviation in anonymized mobile phone traffic at workplaces for weekdays in July 2022 compared to the pre-pandemic baseline.
Source: Google; Better Dwelling Calculations.
Ottawa and Toronto Workplaces Aren’t Even Close To A Recovery
The flight of the prime working demographic is showing up in Ontario’s big cities. The biggest drop was seen in Ottawa, where workplace traffic is still down 51.1% from pre-pandemic. Following the biggest drop are Halton (-45.0%), Toronto (-43.5%), and York Region (-42.6%). It’s worth noting Halton and York are within minutes of Toronto, and are the same economic region.
Sure, some people are on vacation but close to half the city taking the month off? Not likely. It’s also worth noting the Federal government resumed in-office work in April 2022. That leaves a lot more questions about Ottawa’s workplace traffic.
Workplace traffic is largely concentrated in business districts. A big drop off typically means these businesses don’t have customers, which is bad news. Less spending puts further strain on employment and regional economic growth. That’s why the hollowing out of a downtown core typically occurs at the peak of a real estate cycle.
People Are Shopping & Looking For Entertainment In Small Cities, Toronto Still Lagging
Proximity to work is one of the reasons people live in cities, but retail & recreation is also a big one. Retail & recreation predictably showed the most growth in Bruce County (100.9%), Parry Sound (88.1%), Kenora (61.%), and Muskoka (58.9%). Predictable since these regions are “cottage country,” and see a boost in the summer. They also happen to be regions where Millennials flocked during the pandemic. The increase in year-round residents is good news for these economies.
Ontario’s Small Cities Have Seen Retail & Recreational Traffic Surge
The average percent deviation in anonymized mobile phone traffic at places of retail & recreation for weekdays in July 2022 compared to the pre-pandemic baseline.
Source: Google; Better Dwelling Calculations.
Ontario’s big cities once again haven’t been so lucky. Ottawa (-12.6%) saw the biggest drop for retail & recreation, followed by Toronto (-11.7%). Traditionally both cities have bustling summer retail traffic, but not this year. It’s even more impressive when you consider the drop is contrasted to the slowest retail period of the year. That’s how bad things are.
People pay large premiums in cities due to their proximity to jobs, as well as retail & recreation. Eroding the attractiveness of those amenities means it’s more difficult to justify the premium. Experts assumed the recovery in Toronto would be quick after public health measures were lifted. However, the prime working demographic seems happy in the small cities they just moved to.
The flight to the suburbs happens every real estate cycle, as young adults are priced out or seek better value. The only unique thing that occured this time is the work-from-home trend allowed these workers to move much further out than typical. But try to act surprised, since you’ll likely hear from everyone with skin in the game that “this time is different.” Just like every other time.
If you’re able to work from home off a PC that means anyone can do your job from any third world country for a fraction of the cost. That’s the next phase.
If you don’t have to have a license on what you do.
A lot of physicians and lawyers are working from home.
This is why you gotta get a unionized job with the government. There are a lot of trade offs but you’re very hard to outsource
But what’s the phase after that? If they outsource all possible remote work (being mostly knowledge related work) done in Canada, who’s still in Canada? What kinds of jobs are there? Who’s immigrating to Canada under those conditions? Aren’t you losing potential consumers when you outsource because those former employees are either out of jobs, in lower paying jobs or have left the country.
And can’t it go the other way? Should an employee be allowed to work from anywhere if they can work remotely? If your staff are willing to move to Cambodia because its cheaper to live there and you can pay them less, should companies do that? What loyalty is there to any country under these conditions? And who collects the tax revenue?
if that were the case the companies would have done that years ago. The outsourcing industry is another can of worms just waiting to be opened. Also with DATA privacy laws and data laws mandating that it stay in the country will make that worse. So this fear mongering that you are doing on behalf of your vested interest will not go anywhere.
So which way is it then? If it’s part of a bubble contagion, millennials will eventually move back to Toronto, preferably after the peak. If WFH really is structural, then cottage country will undoubtedly gain.
The movement to cottage country is permanent, the value of the houses in a squeeze is going to have to adjust though. Some of those cottage markets are already down over 20% and we’re not even seeing inflation slowdown.
People are also driving less due to substantially higher gas prices… So those in larger urban centers are likely finding alternative transportation. Or they may just be staying in more to save money as housing costs are much higher in most larger cities.
Article specifically says it’s not related to car traffic, it’s mobile phone traffic.
Funny kink with Google is it classifies your home as work if that’s where you spend your work day too, so it might even be over reported.
As for public transit stats, they’re still way down. A lot of companies are letting their staff work from home since they’re happier.
The labor shortage in the GTA is especially telling. People don’t want to accept low wage jobs that wouldn’t even allow them to pay their rent. There’s a job vacancy in at least one of every three small business establishments that I have seen but no applicants.
Sure is. I’ve had a barber leave because they were tired of working “just to pay rent,” and same with my regular waiter at a breakfast joint. Tragic to lose all of the soul of the city for a highly polished and characterless region.
Great news for small towns though.
There’s also been a huge uptick in covid in the last month that still continues. I would say at least half the people i work with directly were affected and at home for 1 week each.
” It’s also worth noting the Federal government resumed in-office work in April 2022. That leaves a lot more questions about Ottawa’s workplace traffic.” This isn’t exactly true, offices opened to those wanted to return in April but uptake has been very low. Beginning in September many federal departments will begin hybrid work with a certain number of mandatory days in the office. That should change some of the dynamics for the Ottawa numbers. Plus, it’s not that far off to say half the federal public service is on vacation during the summer.
Federal gov says 90% is back and just a small portion of gov employees are refusing to return. Ontario made it mandatory on April 4 for gov employees to return.
https://www.cbc.ca/news/politics/covid-canadian-government-work-1.6543860