"Real estate capital reproduction of space" in the Parkdale neighborhood of Toronto

-- "reproduction of space," urban sociology

Instagram image, davin.craig.

The Guardian has an article about "the gentrification" of the Parkdale neighborhood of Toronto ("'My Parkdale is gone': how gentrification reached the one place that seemed immune"), but I don't think the word "gentrification" adequately describes the process.

Basically, the neighborhood became identified as an opportunity for the international/national real estate ownership, management, and development, acknowledged as an economically significant  "node" or "submarket" within the system of international real estate capital. From the article:

But the lively streetscape here masks a threat to what could very well be the last island of diversity in a city swamped by the flood waters of global capital. Huge international real estate investment firms have embedded themselves in Parkdale’s urban fabric, buying dozens of apartment towers and thousands of rental units. Residents claim that threats, intimidation, rampant eviction notices and strategic neglect have become common. So too have tenant protests and rent strikes, where slick corporate offices find themselves occupied by hundreds of angry tenants demanding redress. ...

“There goes another community center,” quipped the Instagram account @parkdalelife about an infamous all-night McDonald’s being demolished to make way for a 700-plus unit luxury condo building, leeringly named “XO.” It was just the kind of hipster fatalism that infects neighbourhoods in the grips of late-stage gentrification.

That's a much bigger and more significant phenomenon than the "property value reproduction process" referred to as gentrification, which can be more of a ground up movement, where people see the value in place and location and the opportunity for property value appreciation.

Capital reproduction is on a much bigger scale.

On a much smaller basis, this kind of capital reproduction is what happened with the commercial district section of the H Street NE neighborhood in Washington DC ("H Street NE Commercial District Revitalization | H Street Festival" and "360 Apartment building + Giant Supermarket vs. a BP gas station, which would you choose?") where I was a co-founder of a neighborhood revitalization effort that so far has resulted in more than $1 billion in development either completed or underway (many other parallel efforts contributed to this).

But when I started I was pretty much a rube and outside of reading business sections of newspapers and magazines for 30+ years, I didn't have a fine-grained understanding of how things work.

Once the city released the revitalization plan for the neighborhood, recognizing that DC was a node within the international system of real estate capital*, national brokerage firms like Marcus & Millichap went in and inventoried every property, every opportunity, and put it in a database available to clients (that's what the real estate information firm CoStar does too).

Community anger is strong and has resulted in a number of protests and campaigns. Photograph: Rene Johnston/Toronto Star via Getty Images.

Once it was mapped and opportunities identified, it became much easier to redevelop.

But the difference in scale between Parkdale and H Street is significant.  Parkdale is bigger, denser--35,000 residents and a planning regime that allows for very large buildings, which DC does not-- and has dozens if not hundreds of very large buildings.

By contrast, H Street NE's opportunities are much smaller.  Still significant, especially at the scale of the neighborhood, district/submarket, and city, but by comparison to Parkdale, much smaller.

* In DC, outside of the center city and a few other submarkets, mostly development is a matter of regional players, not national or international players.

Parkdale has attracted big firms from Europe.  From the article:

... Akelius, the Swedish real estate juggernaut with some $8bn in global assets settled its gaze on Toronto in 2011, Parkdale was a low-income immigrant neighbourhood. But it was no longer a bleak urban sinkhole. Thanks to the Tibetan community, and the hipster incursion that the Tibetans’ stabilising presence had drawn, it was an opportunity.

In 2012, the firm started acquiring mid and high rise concrete slab apartment buildings in Toronto; by 2016, it had amassed 37, and more than 3,000 apartment units. ...

Akelius had already developed a successful business model in Sweden, Germany and the UK: identify neighbourhoods adjacent to fully gentrified districts – like Kreuzberg, a longstanding haven for Berlin’s Turkish population – and exploit the undercapitalization of its rental housing.

A Parkdale apartment building owned by MetCapital.  Image from the Toronto Star article "Parkdale rent strike over repairs, above-guideline increases ends with tenants declaring victory."

That's one firm. At this point, the entire H Street market for apartments might total around 3,000 units.  From "Akelius stocking up on Toronto and Montreal apartments":

Akelius Canada is a subsidiary of Sweden’s Akelius Residential Property AB, which was founded in 1994 and owns more than 51,000 properties valued at around $9 billion in Sweden, Canada, Germany and the United Kingdom.

The article describes the trajectory of change in Parkdale, how because it was outside the city center, and dealing with the aftermath of deindustrialization and the impact on the micro property market, it wasn't seen as a place where "gentrification" would really occur. From the article:

Gentrification, on the surface, seemed less of a threat than an impossibility. As the rest of Toronto surged upward in the early 2000s, Parkdale was forever “up and coming” – real estate code for a litany of social ills – and a target for only the heartiest of speculators. Some did come, sprucing up half a block here, a cluster of houses there, but Toronto’s real estate boom left Parkdale’s intractable poverty largely intact.

But the reality is that less than 4 miles from Toronto's downtown, in one of the nation's top two property markets, in a city that is a node in the international system of real estate capital, with large scale opportunities for portfolio investment, it was only a matter of time, as better placed development and acquisition opportunities in the primary market were absorbed.

Interestingly, because the scale is different, with large apartments, there is also the opportunity for tenant organizing, and Parkdale residents are protesting changes, and at least in terms of legally too large rent increases, they are having some effect, assisted in part by the neighborhood-based Parkdale Community and Legal Services nonprofit legal aid clinic.

But the article also discusses a nascent community land trust effort, which is too little too late. And maybe Toronto and Canada don't have community development corporations the same way that we do in the US. CDCs could have purchased properties in order to maintain permanent affordability.  (Not that CDCs do a lot of this in the US either.)

Then again, Toronto has found the need to provide assistance to "tower buildings" in terms of rehab support and other technical assistance to maintain the viability of such buildings as they are.

-- "The long term potentially negative aspects of condominium buildings as a dominant housing form in cities," 2016