With retail-owned land, we don’t have to shop around for a housing solution

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Sarah Chan is the planning and design lead, and Nigel Carvalho an urban planner, at the Infrastructure Institute at the University of Toronto’s School of Cities.

In January, Leon’s Furniture announced a plan to redevelop the 40-acre parcel of land that currently holds the company’s head office and just one retail store into more than 3,500 units of housing – an impressive vision for this underused area. “It’s about making the best use of the land,” CEO Mike Walsh told The Globe and Mail.

But while Leon’s may be the latest large retailer to build housing overtop an existing store, it is not the first. The redevelopment of Toronto’s Galleria Mall and Vancouver’s Oakridge Centre have been under way for several years now, and those projects demonstrate how retail sites can become complete communities with the addition of new housing, child care, libraries and other amenities. It is clear that the major retail chains that punctuate Canadian urban landscapes in strip mall or big-box configurations hold enormous potential to increase the housing supply and provide new social infrastructure.

So why stop there?

Redeveloping retail sites is one prong in addressing the land crisis underlying the housing shortage. Vacant land is typically scarce in city cores – just 2.1 per cent of Toronto land is available, according to the most recent Statistics Canada data – and this reality has prompted some developers and politicians to advocate for the development of protected farmland. Ontario Premier Doug Ford pushed this message last year, claiming that there is a lack of urban land to develop, requiring the paving over of forests. (We beg to differ.)

Other creative strategies to help address the housing and land shortage include redeveloping surplus public lands, a plan that has been increasingly adopted in jurisdictions across the country, with Toronto’s Housing Now program aiming to produce 15,000 units on 22 publicly owned sites in 10 years, British Columbia making efforts to create a bank of public land for affordable housing and, more recently, the federal government committing to building 29,200 new units on its own surplus lands. But even if all the surplus lands owned by each level of government were miraculously redeveloped immediately, there would still be a massive housing gap. No sector alone can deliver the housing needed in quantity or speed.

Major cities have also advocated for infill development, which has been promoted as a way to intensify underused sites in neighbourhoods that are already walkable and rich in amenities; in return, the added density would also provide the population necessary to sustain these amenities. Recent pandemic-recovery efforts have also sparked interest in the conversion of vacant office buildings to residential units, but not all offices are suitable for conversion – window access and water-pipe availability, among other issues, can make that process very difficult.

While these efforts are worthwhile strategies to pursue, they are still only part of the solution. Large retail sites offer an alternative to paving over forests and overcome the limitations of smaller infill sites. Many of these retail-held lands already have strong transportation connections, making them easily accessible by car or public transit and prime opportunities to create density. Larger or multisite developments also make sense economically; increasing the number of units that can be sold or rented in turn increases developers’ ability to repay construction costs and produce returns. Still, these lands are often overlooked by policy makers because this new intervention for privately held retail lands falls outside of housing policy’s usual jurisdiction.

If surplus public lands are the lowest-hanging fruit for housing development, then underutilized retail land portfolios could potentially be the second lowest-hanging fruit. They present a gold mine of opportunity – and valuable land – that has not been tapped into at scale. After all, in the spirit of former McDonald’s chief financial officer Harry J. Sonneborn’s famous strategy, many retail companies are actually in the real estate business.

In 2022, the Infrastructure Institute conducted a study with Esri Canada, in which we took just six large Toronto retail chains – Metro, Sobey’s, The Beer Store, IKEA, Canadian Tire and Choice REIT – and generated hypothetical housing overtop their underutilized facilities and surface parking. The results were stunning: We found that this effort could produce a total of 68,576 units, even under conservative parameters. Making just 10 per cent of this affordable would deliver almost 7,000 such units. The generated redevelopments also accommodated new amenities, retail and greenspaces, replacing needed parking in garages or underground.

Now imagine if we could take all the underutilized lands of all the retail-land portfolios in our cities, and build housing overtop their outdated malls and redundant parking lots.

There are already existing tools and policies in place that can be expanded upon to provide the necessary incentives to build housing on retail-land holdings. They include new federal policies to streamline zoning approvals and remove GST on rental housing, mandatory density targets near transit stations, and programs that expedite applications with affordable housing. Expanding incentives could take the form of offering faster timelines, waived development fees, density bonuses and other benefits for housing projects spanning multiple retail sites.

The cost savings and revenues generated made possible by these incentives could also then be reinvested into the services and amenities needed for resilient communities. Real estate economics are already moving favourably toward large or multisite developments, and all levels of government have a responsibility to work together to bring affordability and other positive social outcomes to these redevelopments as they occur.

The urgent delivery of all types of housing will only be solved from collaboration from all sectors and stakeholders. With retail land, there is an opportunity to introduce policy, partnerships and funding that streamline the inclusion of affordable housing and other social infrastructure into building the communities we need.