Item - 2024.PH17.13

The Planning and Housing Committee:

1. Requested the City Solicitor to report back on implementation through OPA 231 in the first quarter of 2025.

2. Requested the Chief Planner and Executive Director, City Planning, the Executive Director, Housing Secretariat, the Executive Director, Development Review, the Executive Director, Municipal Licensing and Standards, and the Chief Building Official and Executive Director, Toronto Building to conduct an analysis of the applicable policies, standards and regulations related to replacing office space with co-living residential uses/housing, and report back by the April 10, 2025 meeting of the Planning and Housing Committee.

3. Requested the Chief Planner and Executive Director, City Planning to hold a meeting with interested stakeholders outside of the OPA 231 appeals process to provide them with the opportunity to provide feedback on Office Replacement Policies.

4. Requested the Chief Planner and Executive Director, City Planning to ensure, through mediation on OPA 231, that a percentage replacement no greater than 25 percent is contemplated and make best efforts to provide greater opportunities for office buildings to convert to residential and alternative uses.
 

5. Requested the Chief Planner and Executive Director, City Planning and the Executive Director, Development Review to explore opportunities to use the Office Space Needs Study findings and principles in the ongoing North York Centre Secondary Plan review and report back as necessary to the Planning and Housing Committee as part of the North York Secondary Plan review project.

Increasing office vacancies continue to impact large cities across North America as companies adjust to hybrid work following the COVID-19 Pandemic. To respond to the significant rise in office vacancies coming out of the COVID-19 Pandemic and to address development pressures on office buildings, the City initiated the Office Space Needs Study and retained consultants to conduct market and planning analysis and support public and stakeholder engagement.

This report follows on the Planning and Housing Committee’s (PHC) endorsement of proposed policy directions (Attachment 1) resulting from the Office Space Needs Study (Office Study) and request for further analysis at its meeting on July 11, 2024 (PH14.9). In addition to endorsing the proposed policy directions, PHC adopted motions requesting City Planning to undertake additional economic and sensitivity analysis and to consult on additional policy direction for purpose built rental housing.

The City’s land economic consultants concluded their analysis and provided the Office Space Needs Study: Needs Assessment & Policy Direction (Attachment 2), which includes analysis of office market projections, office conversion typologies, financial feasibility and sensitivity analysis. The consultants provided the following market-based directions:

· New office development will continue to be challenging and the inclusion of significant amounts of office space in new development represents a burden to feasibility that may lead to net-financial losses in many cases.

· The likelihood of large, high-performing, Class A office buildings being converted to residential uses is limited

· There is an opportunity to provide a policy response to the major shift in office needs in Toronto to direct the appropriate amount/type of conversion activity.

· The City should clearly define and communicate the parameters of any conversion-related policy to avoid confusion among stakeholders.

· Consideration will need to be given to balancing current development pressures that predominantly focus on residential uses with longer-term goals relating to growth in office and other forms of employment.

· There will be an inherent need to regularly monitor and update the City’s rationale for office conversion policies in response to ever-changing market conditions.

This report responds to the PHC direction by providing the additional analysis and engagement findings. The report also sets out next steps for bringing new office replacement policies into effect and concludes the Office Study.