47 replies to this topic

[Mike K.]

Victoria slammed by business magazine

Canadian Business magazine cast Victoria 40th in its annual report (September 25-October 8 issue) on top cities to start a new business.

"This was a bit of a surprise," admitted Andy Holloway, senior writer of the report.

It was a huge slide from last year - Victoria sunk from an unimpressive 26th to unbelievable last place.

The magazine rates Canada's 25 largest cities and throws in 15 others to provide regional representation using five criteria: operating costs, costs of living, commercial building permit numbers, crime rates and the change in unemployment.

The criteria has remained unchanged since the magazine started publishing the report in 2001; however the relative importance of each category has shifted.

"That's in part why there's been a lot of movement on the list from last year to this year," Holloway explained.

The most important category identified by readers was operating costs.

The numbers are based on the cost of running a head office with 350 employees. Included in those costs are salaries, benefits, taxes, cost of utilities, cost of land and construction, and travel costs.

The cost of living category hinges on an index that puts Toronto at 100. In the index, Victoria ranked 83.1 - roughly in the same neighbourhood as Calgary. It's still well behind our big sister - Vancouver ranks a teeth-sucking 98.3.

The biggest blow to Victoria's position came from commercial building permit numbers. Compared to the previous year, Victoria pitch-poled in commercial building growth.

In comparing the first six months of 2004 to the first six months of 2005, the number of building permits increased by 38 per cent. From 2005 to 2006, it dropped just over 11 per cent.

"So that was quite a good run for Victoria, but the momentum didn't continue," Holloway said.

Changes in unemployment were based on June 20, 2006 compared to the previous year.

Readers weighted crime rates higher than in previous years, bumping it up from the least important category to fourth in importance.

"Which Victoria did not do well on," Holloway said.

Despite arguments that Victoria gets dinged because the rates don't take the municipalities into account, Holloway argues most cities rates improve when the region is factored in.

"So if you add those in, Victoria's rate is much lower than it is just for the municipality of Victoria itself. We did do some number crunching just to see how that would affect the rankings and it really doesn't because everybody's rate drops as well."

Since the article appeared, Holloway has received responses from cities across Canada.

"If you finish on top you're extremely happy and if you finish near the bottom or if you slip you start looking for excuses and that's to be expected. You know I'd be really disappointed if those near the bottom weren't angry about it. Every city should want to be at the top of every list," he said.

Victoria Coun. Geoff Young didn't dismiss the survey results.

"It's certainly worth paying attention to, although I don't think I would agree with some of the ways they weight their criteria."

Local business leaders were skeptical of the results, as it didn't include the entire Capital Region when crunching numbers.

"We are a city of 77,000 people serving 350,000 people in a very tightly confined geographic area. Therefore some of the development is spilling out of downtown and going into the peripheral area," said Ken Kelly, general manager of the Downtown Victoria Business Association.

"It points to, maybe we should be considering amalgamation," he said, adding it would mean a greater cut in federal funds and equal footing with other cities.

But according to Kelly, the report doesn't tell the whole story.

"I'm not denying their calculation, but I would caution people against putting a number or a ranking to something that doesn't measure well that way.

"Everybody looks at our relative cost of living as being a bit of a detriment, but everyone wants to be out here," he said, adding Victoria is ranked best place to live and best place to retire.

Bruce Carter, CEO of the Greater Victoria Chamber of Commerce, said Victoria's desirability is a double-edged sword.

"If you look at the hard facts around three per cent unemployment, lack of commercial office space and high rents, that becomes a challenge," Carter said. "The reality is, the reason why those things are that way is because it's a great place to live."

The business community is concerned about the crime rate's affect on Victoria's image.

"Many of them are very concerned about minor level crime, particularly street level homelessness, open drug usage and property crime," Carter said.

The Greater Victoria Chamber of Commerce is advocating a community court trial to address petty crimes.

Whether local government and business leaders agree with the ranking is moot, says Holloway.

"Essentially, it's a very sexy way to get into talking about issues that Canadian cities face when it comes to attracting corporate development."

mailto:alavigne@vicnews.com

[HOMBRE]

i'm not surprized, lets face it, our industries aren't diversified enough and politicians are doing nothing about it.

i think tax breaks to various industries would really help us out. victoria really needs to get off its ass and realize there is more industries than just tourism and service to those tourists and seniors.

[G-Man]

Whatever this just comes down to what critieria they are looking at. Name one other big city in Canada that you can walk out of in ten minutes. This has everyhting to do with our multiple municipalites and nothing to do with the facts. We are skewed to the bottom due to this fact.

Also I don't know if amalgamation has anything to do with political bend I am an avid amalgamationist but also a social democrat.

[Mike K.]

Whatever the criteria, 39 cities beat out the capital of British Columbia. That's an embarrassment.

Furthermore it's alarming to be dead last when this town is the capital of a province that has rebounded economically since the travesty of the 90's. So what are we doing wrong?

Much of our economic reality has to do with municipal policies and political goals. Victoria's leaders stall economic activity, whether its development, entertainment or other (I love their tantrums about 24 hour food establishments!) under the guise of protecting a fragile tourist economy, althewhile infusing monies into municipal pet projects with dubious returns on investment (the downzoning at Ogden Point comes to mind, leveraging future "green" infrastructure through cheap land sales a la Dockside, etc). And instead of breathing down the back of the port authority's inability to make complete use of their lands they nod their heads in agreement when community activists spin tales about industrial lands becoming "circuses" with residential, industrial and commercial uses.

We need economic diversification and under the current leadership that's not happening. Victoria's economic bureaus are clueless about encouraging diversification and in the event that it does take place they bow to "concerns" from community activists.

[G-Man]

Victoria's business economy at a glance



By Patrick Blennerhassett
Victoria News
Oct 20 2006


According to a recent report done by Canadian Business Magazine, Victoria is the worst city in the country "to do business."

In a recent report of 40 cities in Canada, Victoria finished dead last, dropping from 26th in last year's survey, all attributed to a high cost of living and a high crime rate.

The ranking took Mayo McDonough, executive director of the Better Business Bureau of Vancouver Island, by surprise.

"Apparently the high cost of business rent is a problem," she said. "This is a turn around because when the provincial government started downsizing, there was a lot of surplus space available in Victoria. I guess that is all changing."

According to the magazine's report, a decrease in commercial development also contributed to the low ranking. McDonough said the report is a bit misleading as commercial development has declined in the City of Victoria, but has flourished in outlying communities.

"When these surveys look at Victoria they don't tend to include Greater Victoria, like the rapid growth that's been going on in the western communities."

However, McDonough said she's optimistic about the CRD's economic future, and we have a certain age demographic to thank for that.

"We expect a real upsurge in seniors' services," she said. "Victoria has the highest concentration of seniors of any metropolitan area in Canada."

Currently, according to report recently done by the Capital Regional District: Regional Planning Services department, the majority of the CRD's employees work for the provincial government, which includes the Vancouver Island Health Authority, the Department of National Defence - CFB Esquimalt, and the University of Victoria. Government jobs employee around 11,500 people in the CRD.

[Mike K.]

In case anyone's interested, our "seniors" rate is dropping, believe it or not. A few years ago our 65+ percentage was 18.5%. It now hovers at just over 17%. Vancouver's, in comparison, is at around 15% and Montreal's at around 14%.

Just thought I'd throw that in...

[gumgum]

Nothing against our senior citizens, but this is good news. Victoria needs more youth.

[m0nkyman]

Derf didn't say we were getting more youth, just that the percentage of of 65+ers was going down. That could very well mean we're getting a lot more 45 year old crack addicts....
OK, yes, I'm cynical and bitter.

[gumgum]

^True, but it's a step in the right direction.

[TheVisionary]

YES! Victoria needs more youth and youth culture! It's always the young who trail blaze new paths and find new ventures, try new things and improves on what came before them. Most of the old seem only interested in keeping thing stagnant and the same. They don't care about evolution of things and processes! They only care about holding on to the same things until they die and not have to care anymore. They are too set in their ways. This doesn't lead to dynamic development.

Keep the young, energetic, brilliant at home to make this place better, or they will leave and make some other city better.

[Holden West]

^That's an offensive and ridiculous generalization unworthy of further comment.

[Mike K.]

It's incredible that six years ago Canadian Business listed Victoria as the least favourable Canadian city in which to operate a business. Sadly not much has changed, unless, of course, the cost to run a business has further increased.

On the eve of the Shop Local Victoria movement I think it's opportune to discuss the costs that go into running a business in Victoria.

Recently there was a discussion about the sudden demise of Pink Sugar, a relatively popular cupcakery on Fort Street that shut down in January with little notice other than the sudden appearance of upside down chairs during regular business hours.

On the former Pink Sugar's retail space which has sat untouched for four full months a note has been posted outlining the lease costs of running the little spot. The costs are, for lack of a better term, astronomical.

Property: 773 Fort Street (former Pink Sugar location)
Area: 1542 square feet
Rent: $17 per square foot, + Triple Net (NNN)
Base Rent: $17 x 1542 / 12 monthly payments: $2184.50
NNN: $1,464.90 / month + Taxes (I find it odd that there is tax on top of a tax [NNN includes municipal taxes, does it not?])

Total monthly rent: $2184.50 + ($1464.90 + Taxes) = $3649.40 + Tax

That's a whopping $43,800 (not including taxes) annually for the ex Pink Sugar to have opened its doors every day. Add utilities, insurance, alarm services, AND tax, and you're looking at an easy $50,000 annually to operate a small retail space in this particular (and let's not forget old) downtown building.

The latter is what is eroding the ability of local businesses to stay in business, not necessarily a lack of interest or customers from around our region as the Shop Local Victoria movement may imply. Just look at the NNN cost of Pink Sugar. If that's what a tiny space pays monthly, what do you suppose a large retailer like Atlas Audio Video or Ocean River pays to the city in annual taxes? $40,000? $50,000?

In a recent post about Paboom Home Import's owner's decision to move from its location on Fort Street, the owner lamented local landlords being disinterested in lowering their rates and helping make it easier for local businesses to run a profitable enterprise. Despite lots of spaces for lease throughout the downtown area, Paboom's landlord didn't budge and the retailer is leaving to a new location in the 1400-block of Store Street.

[spanky123]

Not a bad price for high traffic retail storefront space. If you don't like $17 per sq/ft then compare to other cities!

Below is a list of the additional Canadian cities included in the Colliers International 2011 Global Retail Report.

• Calgary’s 17th Avenue, USD $53.47 per square foot
• Halifax’s Spring Garden Road, USD $48.61 per square foot
• Edmonton’s Downtown, USD $43.75 per square foot
• Ottawa’s Byward Market, USD $38.89 per square foot
• Saskatoon’s Broadway Ave, USD $34.03 per square foot

[Bob Fugger]

Not a bad price for high traffic retail storefront space. If you don't like $17 per sq/ft then compare to other cities!



Below is a list of the additional Canadian cities included in the Colliers International 2011 Global Retail Report.

• Calgary’s 17th Avenue, USD $53.47 per square foot
• Halifax’s Spring Garden Road, USD $48.61 per square foot
• Edmonton’s Downtown, USD $43.75 per square foot
• Ottawa’s Byward Market, USD $38.89 per square foot
• Saskatoon’s Broadway Ave, USD $34.03 per square foot

Except that you can't tell if they are comparing apples with apples, though. If you add Triple Net to Victoria's $ per sq ft, it is comparable with these figures - which may or may not have that factored in.

[spanky123]

Except that you can't tell if they are comparing apples with apples, though. If you add Triple Net to Victoria's $ per sq ft, it is comparable with these figures - which may or may not have that factored in.

Those figures are not NNN. Now Fort St isn't Government but the point is that $17 / sq ft is not outrageous. $10 for common costs is a little high but not crazy.

[Mike K.]

What are we even comparing, though? Are these properties along the Government Street of those respective cities? Are these "average" lease rates in those areas, or what, exactly?

The point is Pink Sugar was located in a nondescript 1500 sq. ft. retail space in downtown Victoria that costs $44,000 annually just to lease. That's astronomical and these high costs are the reason for the many empty storefronts throughout our urban core.

But for what it's worth any retail space in a more modern building or in a more popular retail area of downtown goes for $50/sq. without NNN. Our numbers are comparable to Canada's major cities, meanwhile we have a regional population that puts us only above Saskatchewan's cities west of Quebec.

[North Shore]

Pardon my ignorance, but what, exactly, is 'Triple Net', please? And how is it calculated?

[sebberry]

That's a whopping $43,800 (not including taxes) annually for the ex Pink Sugar to have opened its doors every day. Add utilities, insurance, alarm services, AND tax, and you're looking at an easy $50,000 annually to operate a small retail space in this particular (and let's not forget old) downtown building.

You'd have to sell a lot of cupcakes to cover that, plus staff. Not to mention the owner has to make a living wage, etc, etc...

I'm not surprised they packed up and left.

[Mike K.]

Pardon my ignorance, but what, exactly, is 'Triple Net', please? And how is it calculated?

Triple Net, or NNN, is a tenent's portion of the maintenance, municipal tax and other shared costs of being a tenant of a commercial building. In other words, you pay your lease rate plus the operating (NNN) costs every month.

[G-Man]

Our numbers are comparable to Canada's major cities, meanwhile we have a regional population that puts us only above Saskatchewan's cities west of Quebec.

Or you could say Victoria is the 5th largest metropolitan area west of Ontario.