Spatial Fix and Spatial Substitutability Practices ...

SPATIAL FIX AND SPATIAL SUBSTITUTABILITY PRACTICES AMONG CANADA’S LARGEST OFFICE DEVELOPMENT FIRMS

Igal Charney1 Department of Geography University of Haifa Israel

Abstract: Among agents that reflect and shape urban space, prominent property developers are powerful players. This paper examines the spatial practices of Canada’s largest office development firms. These firms constantly explore new frontiers for investment, but at the same time well-established nodes are rigorously maintained and protected. Larger urban areas are preferred locations for investment; yet among them only a few cities attract the vast majority of investment. Once an investment channel is initiated and a threshold is reached, existing assets act as magnets, attracting more investment and strengthening the allure of particular places. Within a particular place (a city or a metropolitan area) the mix of properties held by a firm is likely to change over time. Core properties are considered strategic assets and therefore are retained as long-standing investments; peripheral assets have to meet corporate requirements and are thus subject to trade and replacement. Findings confirm the key position of Toronto within the Canadian urban system but also indicate that the scale of property investment does not fully correlate with urban hierarchy. On the intraurban scale, the framework of core-periphery properties helps to explain the spatial patterns of office development and the primary role of traditional nodes. [Key words: property developers, office development, core-periphery portfolio, Canadian urban hierarchy, Trizec Corporation.]

Literature on property development has emphasized its cyclical nature, and periods of major booms and slumps, as in the 1980s and early 1990s, have been subject to extensive research. In particular, studies have examined the features of office development in cities across the globe (Feagin, 1987; Fainstein, 1994; Leitner, 1994; Moricz and Murphy, 1997; De Magalhaes, 1998). Less emphasis has been placed on the practices of producers and investors in the office sector. These agents act as interpreters of structural conditions and make the necessary adjustments to accommodate investment in specific places and projects. The essence of property development is to exploit the specific qualities of locations through development of new properties or acquisition of existing properties to produce financial gains. Differential qualities change according to structural conditions such as property cycles and in line with contingencies like the specific configurations of corporate portfolios. Large property development firms are pivotal agents in the real estate sector and their decisions and actions make a substantial impact on the property sector and the overall built form. These agents usually modify their operations according to

1

Correspondence concerning this article should be addressed to Igal Charney, Department of Geography, University of Haifa, Mount Carmel, Haifa, 31905, Israel; telephone: 972-4-8240039; fax: 972-4-8249605; e-mail: [email protected]

386 Urban Geography, 2003, 24, 5, pp. 386–409. Copyright © 2003 by V. H. Winston & Son, Inc. All rights reserved.

SPATIAL FIX AND SUBSTITUTABILITY

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changing structural conditions but also according to city-specific conditions and individual expectations. This paper documents restructuring practices pursued by large property firms that develop and acquire (and dispose of) office buildings across the Canadian urban system. It identifies situations where property developers decide to explore new investment arenas and where they continue working in their “old” operational arenas. This paper begins by providing a framework that links place characteristics and property investment. The particular features of place determine the type and the extent of investment to be undertaken. The relative immobility of local advantages accumulated on the local scale acts as a barrier to far-flung expansion. Property developers are both conservative and avant-garde in their behavior. They persist in conventional practices by keeping properties in established places, but they also explore new frontiers for growth. Next a review of research on office development is provided; this subject has gained importance in geographic literature particularly following the office boom of the 1980s. Studies have emphasized structural conditions, local circumstances, and their interactions. Overall, the specific role and practices of developers in office development has been downplayed. In the following section, a framework to examine corporate portfolios is introduced. This framework differentiates core and peripheral assets; each type of asset has distinct features and is developed and maintained for different purposes. The section which follows analyzes the spatial practices of large Canadian office development firms over the last 25 years. Overall, large firms have preferred large cities as their operational spaces, but some places are more privileged than others. The final section studies the case of Trizec Corporation, a leading Canadian property development firm, which has been active in office development since the early 1960s. URBAN SPECIFICITY AND PROPERTY DEVELOPMENT Property is a physical and a financial asset. As a physical asset it is fixed in a given place; as a financial asset it is mobile and tradable (Haila, 1988; Coakley, 1994). The production of a property takes a long period of time; it involves complex technical, legal and financial arrangements so it is deeply embedded in place. On the other hand, the procedure of buying an existing property requires less local commitment and allows greater spatial flexibility.2 The importance of local conditions has preoccupied the literature in an era when global forces seem dominant. Still, spatial uniqueness has been recognized as an important component in economic performance as specific conditions in localities have facilitated the creation of competitive advantage (Harvey, 1989; Amin and Thrift, 1992; Swyngedouw, 1992). As Healey noted, “in a world where integrated place-bounded relationships are pulled out of their localities the qualities of place seem to become more, not less, significant” (Healey, 1998, p. 1531). Urban specificity is particularly important in the property sector, which produces spatially fixed assets. In addition to fixed assets, property investment involves spatially focused social and economic networks of operation

2

For a detailed account of switching practices, see Charney, 2001.

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IGAL CHARNEY

that are “contingent upon which actors are involved and how they are organized, as well as the particular historical and spatial context” (Pratt, 1994, p. 204). Specific conditions make property development and investment an activity embedded in particular places (Cox and Mair, 1988; Leitner, 1994; Pryke, 1994a). According to Cox and Mair, local dependence is “a relation to locality that results from the relative spatial immobility of some social relations, perhaps related to fixed investments in the built environment or to the particularization of social relations” (1989, p. 142). In addition to premises, physical infrastructure, and appropriate labor skills, locally dependent conditions include local knowledge and relations of trust with a network of agents. The structure of relations between social agents is crucial in confronting issues of historical and spatial specificity. These specific relations are related to the particular characteristics of place, which are not stationary but evolve over time (Ball, 1986; Pryke, 1994b). The relations are not easily transferable and they may even be permanently fixed. All this may contribute to profitability and serve to differentiate one location from another. To the extent that the firm cannot reconstitute these profitable conditions elsewhere, locations for that firm assume a degree of spatial nonsubstitutability, locking industries onto certain trajectories. These may increase over time as local advantages accumulate (Cox, 1993).3 Information and knowledge concentrated in well-defined territories have been important inputs into the production and circulation of capital (Storper, 1997; Malecki, 2000). Storper (1997) placed emphasis on territorialized activities. These are “rooted in assets that are not available in many other places and cannot easily or rapidly be created or initiated in places that lack them” (Storper, 1997, p. 21). Property development and investment may be considered as such. Assets for agents involved in this sector include information and knowledge. Agents have to establish presence in a place through multiple encounters with different mediators such as real estate professionals, the local business community, and local power brokers. Before office development takes places, for instance, suitable zoning bylaws have to be in place and a permit has to be issued by a particular municipality. Above all, knowledge on the particular characteristics of the market has to be collected, analyzed, and interpreted. Thus, “being there” provides an edge for property development firms. Nevertheless, structural conditions may reduce the importance of local constraints during upswings of the building cycle and give emphasis to local knowledge in less well-to-do periods. Over time, spatial substitutability may narrow even more. Firms can widen their local knowledge and deepen their relations of trust (Cox, 1993). As a result, operational spaces are determined, evaluated, and defended on a regular basis. Maintaining local relations and presence is a venture that has to be constantly nurtured. Defending and enhancing the local settings becomes a major goal, and firms may intervene directly in local economic development and create conditions that will benefit them (Cox and Mair, 1988; Haila, 1991). This practice is time consuming and expensive, so it tends to intensify over time, making local knowledge in specific places a valuable asset. Experience and local

3

This notion also fits the cumulative causation theory (Myrdal, 1957).

SPATIAL FIX AND SUBSTITUTABILITY

389

networks minimize the cost of doing business, and determine the capacity and ambition to move to new territories, or whether to stay in accustomed settings. Broad structural conditions set the stage for property development and investment, but specific agents are the catalysts that take advantage of these conditions to mold place and time-specific products. Structural and agent-based approaches are complementary interpretations, since interactions between economic conditions and agents’ calculations explain the production of built space (Pryke, 1994b). Real estate literature assigns the developer a pivotal role in the development process (Marriott, 1967; Lorimer, 1978; Feagin and Parker, 1990). Property developer is a generic term used to describe individuals or firms that engage in development of real estate properties. In most cases, the developers’ role also includes trade in finished properties (acquisition and disposition) and property ownership. Among property developers some agents are powerful enough to influence the production of large portions of the built environment (Logan and Molotch, 1987; Feagin and Parker, 1990; Fainstein, 1994). The important role of property developers in the 1980s building cycle made Beauregard conclude that “city building is less and less responsive to human need and more and more driven by entrepreneurial fervor” (Beauregard, 1994, p. 730). Nonetheless, the developer’s practices “fuse” structural conditions such as building cycles and the agency’s perceptions. At the recovery phase of the cycle, the developer perceives opportunities when there is no clear picture of the future. As the recovery turns into expansion and the market becomes crowded, some developers leave the specific market to look for greener pastures that offer higher potential profits (Whitehead, 1996). Other authors noted that the behavior of developers is not always based on rationality, but on belief, faith, and wishful thinking. Fainstein (1994) asserted that developers “do not merely react to an objective situation, but operate within a subjective environment partly of their own creation.” She then suggested that “Because personal rewards are not wholly tied to the ultimate profitability of projects, individuals... often succumb to wishful thinking” (p. 18). The developer is considered not just a passive actor in the development process but a proactive agent who makes things happen (Marriott, 1967; Logan and Molotch, 1987; Haila, 1991). A prime example is Olympia & York. This company, the largest Canadian-based property firm in the late 1980s, was considered a major catalyst for the development of the Battery Park City (World Financial Center) in New York and Canary Wharf in London (Sudjic, 1992; Fainstein, 1994). GEOGRAPHICAL LITERATURE ON OFFICE DEVELOPMENT Office development as a research field in geographical literature is relatively new even though there is vast literature on real estate development and on the office sector. The initial focus of research was on the demand side. Office location and the centrifugal and centripetal forces that shape its archetype intra-urban location, namely CBD and suburbs, were of key interest (Daniels, 1974; 1982; Gad, 1979; 1985; for a review see Matthew, 1993). As producer services turned out to be the fastest growing sectors in the post-industrial economy, research investigated the unbreakable link between services and office space as their working environment. Research has pointed out that producer services are distributed in a highly uneven pattern, with a clear preference to core regions and the largest metropolitan areas (Daniels, 1985; Coffey and Shearmur, 1997). On the

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IGAL CHARNEY

intra-metropolitan scale, the CBD has showed signs of relative decline while suburban clusters have been on the rise (Fujii and Hartshorn, 1995; Coffey and Shearmur, 2002). Spatial patterns of employment in producer and high-order services have a clear effect on office development. For geographers, the growing interest in the supply side of office development is a quite recent phenomenon. Most early research on real estate development was concerned with housing and less with commercial or office development. Following the 1980s office boom, studies explored commercial real estate development, including retail, industrial, and office development. Studies have attempted to explain the mechanism of building cycles in particular cities (Fainstein, 1994; Leitner, 1994; De Magalhaes, 1998). Houston’s cycles were dominated by the oil industry, provision of public subsidies had an influence on development in Minneapolis, and growth-control initiatives exerted an effect on downtown San Francisco (Leitner, 1994). Since the major part of office development is executed in large cities, geographic literature on office development focused on the largest cities within their respective countries: London in Britain, Toronto and Montreal in Canada, Sao Paulo in Brazil, and Auckland in New Zealand (Bryson, 1997; Moricz and Murphy, 1997; De Magalhaes, 1998; Gad, 1999). Overall, prominent agents involved in office development prefer large-scale development projects in major urban areas. On the global scale, property developers favor cities like London, New York, Los Angeles, and Vancouver (Daniels and Bobe, 1993; Edgington, 1995, 1996; Olds, 1995; Beauregard and Haila, 1997). These cities accommodate large-scale projects that promise high rewards and are perceived as safe places for investment. In the geographic literature on office development London occupies a key position. The position of London as a leading global city with reference to its role as a major financial center was cited as the chief reason for extensive office development (Henneberry, 1999; Lizieri et al., 2000). Studies on the City of London emphasized the role of local networks in safeguarding the City as a prime investment setting and the preference of British and foreign property investors to own office buildings located within it (Pryke, 1994a; 1994b; Lizieri et al., 2000). Tradition and inertia played a major role in preserving the City’s dominance. Nevertheless, in the City’s fringe new developments were completed, extending the boundaries of office development to include new investment arenas (Williams, 1992; Daniels and Bobe, 1993; Fainstein, 1994). In general, financially sound investors and major property owners prefer to develop and own assets that are located in the larger urban areas. In the U.S., investments of institutional investors (pension funds and life insurance companies) are highly concentrated in the upper tier urban hierarchy; in the UK, large institutional investors prefer to invest in the London property market (Pryke, 1994a; Bryson, 1997; Lindahl, 1997; Lizieri et al., 2000). THE SUBSTITUTABILITY OF CORE-PERIPHERY PORTFOLIOS Even though property development firms are dependent on specific locations, the larger the firm the more likely it will operate in multiple locations. Development and ownership in multiple locations enables firms to execute switching practices, take advantage of particular conditions, and diversify either by location or by property type (Charney, 2001). Normally, property types are divided into four major categories: apartments, office buildings, shopping centers, and industrial buildings. Nevertheless, properties have

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specific qualities, which affect economic fundamentals, so each property type should be further disaggregated. A common taxonomy within the office sector classifies premier office space (state-of-the-art, modern, and large-scale buildings) separately from all other properties. This distinction leads to the idea of core-periphery portfolios. Gibson and Lizieri (1999) suggested a model that distinguishes core and peripheral assets. The key issue in this model is flexibility. They argue that occupiers and corporate real estate managers differentiate core from peripheral real estate assets. Core portfolio is space needed for the long term. To keep flexibility, space with short-term contractual arrangements is required, namely peripheral portfolio. This framework examines the occupier’s side, but it is also valid for the supply side, the perspective of property developers. Developers differentiate office space both by property type and by location. Large property owners (institutional and cash-rich investors) prefer large-scale buildings or complexes (Edgington, 1995; Malpezzi and Shilling, 2000). Large developers are capable (from the professional and financial point of view) of dealing with this type of development; medium and smaller owners are content with properties of smaller scale (Bryson, 1997). Property developers and owners also distinguish core and peripheral locations (Pryke, 1994a; Moricz and Murphy, 1997). In Britain, large owners of office space, primarily life insurance companies and pension funds, have regarded the South-East as the core, and areas elsewhere as peripheral. Within London, despite the emergence of new office nodes such as City fringe developments and Canary Wharf, the City is still the core office area (Pryke, 1994a; Henneberry, 1999; Lizieri et al., 2000). Development firms and property owners build up their portfolios over a long period. Developers usually start as specialized developers of a particular type and focus on a single city, and gradually expand their spatial horizons. Owners accumulate assets through acquisition rather than development. In the course of the property assembly process, firms that are able to develop or buy core assets, which are prominent properties in terms of size, quality, and prestige, usually keep them for the long term. Gradually, they add satellite properties on that market to take advantage of economies of scale generated by core assets. Urban property markets are not homogeneous but segmented into submarkets (Dunse et al., 2002). As a result, core assets alone or combined with additional properties can command specific property sub-markets. Concurrently, large firms constantly seek additional opportunities elsewhere; but they keep their core properties. The major difference between core and peripheral assets is that the latter are traded on a fairly frequent basis, whereas the former are rarely replaced. Core assets are often kept regardless of the position of building cycles. Even in severe downturns, property development firms hold onto these assets; hence, juggling practices largely exclude core assets. Only in extreme cases do property development firms dispose of their core assets. These assets are distinguished from others by their exceptional qualities, which make them scarce commodities. By contrast, peripheral assets are susceptible to exchange practices. As the market softens, developers and owners often dispose of some of their peripheral assets. THE SPATIAL DISTRIBUTION OF OFFICE PORTFOLIOS AMONG CANADA’S LARGEST PROPERTY OWNERS, 1975–2001 Like other economic activities, office development and investment is spatially uneven; it occurs through well-established channels and its largest share is located in major urban

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IGAL CHARNEY

areas. Large urban areas accommodate head and regional offices of numerous firms, and their economies are dominated by diversified service industries. These types of activity are major consumers of office space. Thus, investment in large urban areas is often seen as more promising and less risky than investment in smaller urban regions with less diversified economies. The Canadian urban system encompasses only a few large urban areas; four metropolitan areas have a population of over 1 million (Toronto, Montreal, Vancouver, and Ottawa) and two are approaching this figure (Calgary and Edmonton). Among these six metropolitan areas, four stand out in their economic power: Toronto, Montreal, Vancouver, and Calgary; Toronto and Montreal are the top-tier urban centers (Green and McNaughton, 1989; Semple, 1996). As a result, office-based employment is highly concentrated in a small number of large metropolitan areas (Semple, 1996; Coffey, 2000). In 1996, Toronto, Montreal, Vancouver, and Calgary housed approximately one-half of FIRE and business services employment in Canada (Statistics Canada, 1996). These urban areas also house the vast majority of office stock; in 2001 they contained 82% of the national office inventory, and Toronto and Montreal alone controlled 60% of it.4 Toronto stands out as the prime business center after many corporate headquarters left Montreal and as a result of Ontario’s faster economic growth than Quebec’s (Germain and Rose, 2000; Polese, 2000). The flow of investment across Canada’s regions is feasible due to the relatively few barriers. Unlike in the United States, where regulatory barriers limit banking operation to the regional scale (the state level), the financial system in Canada is spatially integrated. Canadian banks, life insurance companies, and pension funds, the major financiers of office development, operate across the Canadian provinces. In addition, professional advice is available across Canada as large real estate services firms have a national presence through a network of regional offices.5 Furthermore, Canada’s largest property development firms have nationwide interests. Some of the largest firms have office portfolios in all six-largest metropolitan areas, while other firms have holdings in selected metropolitan areas (Table 1). In an economy dominated by nationwide firms, spatial barriers are reduced and investment capital, information, and knowledge are available across the country. Further, major property developers with expertise and sufficient resources are able to shift their operations and investments across various places according to changing conditions and the particular corporate agenda (Charney, 2001). In this paper, large property development firms are defined as those having the following features: operation in more than one region, assets of several billion dollars, and ownership/development of primarily commercial properties (industrial space, shopping centers, and office buildings). In addition to their domestic operations, most of these large firms are engaged in property development and investment outside Canada, primarily in the United States. Olympia & York was Canada’s most renowned real estate company

4

National office stock includes office space in nine major metropolitan areas; these data are posted on the Royal LePage Web site (http://www.royallepage.com). 5 Their national scope was demonstrated in early 2001 when four major real estate brokers (Royal LePage Commercial Inc., CB Richard Ellis, Colliers International, and J. J. Barnicke Ltd.) launched a new company whose aim is to develop a centralized, integrated, national database of the Canadian commercial real estate market.

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SPATIAL FIX AND SUBSTITUTABILITY

TABLE 1. TOP TEN OWNERS OF OFFICE SPACE IN CANADA, 2001 (BY METROPOLITAN AREA) Owned spacea Toronto

Owner Oxfordb

2,770

d

3c

Montreal

Calgary

Vancouver

Ottawa

Edmonton

3

3

3

3

3

e

–

3

–

1,480

3

3

–

1,400

3

3

3

3

3

3

1,220

3

–

3

–

–

–

970

3

3

3

3

3

3

720

3

3

3

3

3

–

O&Y

690

3

–

3

–

3

–

H&R

470

3

3

3

–

–

–

Bentall

460

3

–

3

3

–

–

SITQ

Cadillac Fairview Brookfield BCIMC

d

OMERS

d

b

f

a

Wholly or partially owned space in million square meters. Part of the assets are jointly owned with OMERS. c Check indicates absence from that particular metropolitan area. d Pension fund. e Dash indicates presence within the particular metropolitan area. f Wholly owned subsidiary of a pension fund. Source: Real estate companies’ annual reports, newspaper articles, and personal communication. b

operating outside Canada; other well-known companies with operations outside Canada have been Trizec (currently TrizecHahn), Cadillac Fairview, Oxford, Bramalea, and Brookfield. Canada’s largest property developers have established operational networks across Canada. Far-flung operations in a vast country like Canada necessitate an established network of on-site representative offices, professional staff, and social relations with local agents. This is particularly the case in property development and to a lesser extent in investment (acquisition of existing properties). Before development takes place, information has to be obtained, and acquaintance with a multitude of agents such as the local business community and city officials can minimize trial-and-error procedures and may reduce the time required to get the necessary bureaucratic approvals. During the development phase, firsthand and regular inspection is needed; further, regular operation and maintenance requires reliable staff on site. Since keeping professional staff on a permanent basis is costly; the dispersal of operations in numerous locations is less efficient than a focus on several places. Consequently, regional offices are located in selected cities. It is extremely difficult to differentiate between developers and owners office buildings. Office buildings are divisible assets that can be developed and owned by several firms. It becomes even more difficult in respect of constructing a long-term synopsis. In addition, information on office portfolios is available primarily for publicly listed companies (and the privately owned Olympia & York), which are generally the larger firms. Hence, for this purpose the term owner is used to describe both developers and owners of office space. In 2001, the largest owners owned approximately 28% of total office space

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IGAL CHARNEY

TABLE 2. THE CHANGING SPATIAL DISTRIBUTION OF THE CORPORATE OFFICE PORTFOLIOS IN CANADA, 1975–2001a 1975

1982

1989

2001

Toronto

39.9

34.0

42.8

45.2

Calgary

7.0

16.0

18.0

17.4

Montreal

17.4

12.9

11.2

15.8

6.8

7.8

5.5

7.7

19.5

12.0

10.6

5.6

Edmonton

3.2

8.1

8.1

3.9

Other

6.2

9.2

3.8

4.4

Total

100.0

100.0

100.0

100.0

Vancouver Ottawa

a

Includes the portfolios of the largest owners. Source: Real estate companies’ annual reports, newspaper articles, and personal communication.

in Canada; since these firms own mainly premier office space, their share of total top-quality office space rises to about 40%.6 Yet over time the list of large owners has changed. The 1975 list is not identical with the 1982, 1989, 1991, or 2001 list. Prominent companies such as Olympia & York, Campeau, Bramalea, and Marathon are absent from the 2001 list; this is a result of the early 1990s recession which led to the collapse of these companies. In 2001, only a few of the 1989 list existed in their original form; instead, extensive restructuring created TrizecHahn (the successor of Trizec), Brookfield, and O&Y Properties (the successor of Olympia & York and Campeau). In addition, the recent list of large owners includes provincial-based pension funds that own large portfolios, or even major property development firms.7 Although these owners are not identical throughout this period, they represent the upper tier of owners of office space in Canada. The overall configuration of office portfolios controlled by Canada’s largest office developers and investors is presented in Table 2, which shows the continuous supremacy of the largest urban areas and the dominance of particular metropolitan areas. In 1975, Toronto, Montreal, and Ottawa held about three-quarters of the large owners’ portfolio. At that time, these metropolitan areas also had the largest office stocks. Montreal and Toronto were the biggest metropolitan areas and Canada’s economic hubs, and office development in Ottawa was partially related to

6

This share was calculated by a means of data on office portfolios owned by large owners (10 million square meters) and total national inventory (36 million square meters). Data on corporate portfolios was obtained from 2001 annual reports and through personal communication. 7 In the late 1990s and the years 2000–2001, several pension funds acquired a number of Canada’s largest property development firms. In 1999, British Columbia Investment Management Corporation (a company that provides professional services for pension funds) acquired the office portfolio of the Canadian Imperial Bank of Commerce (CIBC). The Ontario Teachers Pension Plan Board became the sole owner of Cadillac Fairview in 1999 and in 2001 Ontario Municipal Employees Retirement System (OMERS) acquired Oxford Properties.

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SPATIAL FIX AND SUBSTITUTABILITY

TABLE 3. METROPOLITAN OFFICE SPACE OWNED BY LARGE OWNERS, 2001 Total office stock (‘000 square meters)

Space owned by large owners (‘000 square meters)

Share of metropolitan office stock (%)

Toronto

14,400

4,600

31.9

Montreal

7,400

1,600

21.6

Calgary

4,150

1,780

42.9

Vancouver

3,800

780

20.5

Metropolitan area

Source: Real estate companies’ annual reports and Royal LePage Commercial Inc.

its role as the capital of Canada. The rise of the independence movement in Quebec that culminated in the election of the Parti Quebecois in the 1976 provincial elections caused some anxieties in some businesses in the Province of Quebec. A consequence was the flight of corporate headquarters; the most publicized move was Sun Life Insurance to Toronto in 1978 (Levine, 1990). This flight continued a half-century trend: the rise of Toronto and the erosion of Montreal’s position in the chain of command of the Canadian economy (Nader, 1976; Green and McNaughton, 1989; Leveillee and Whelan, 1990; Germain and Rose, 2000). From the mid-1970s to the early 1980s the fastest growth in Canada was recorded in the Province of Alberta; this growth was associated with the rapid increase in oil and gas prices (Gertler, 1996). At the peak of the Alberta’s oil boom, Calgary and Edmonton had emerged as the fastest growing centers and as attractive places for office development. In a short period (1975–1982) their share rose from 10% to 24% of the largest owners’ portfolio. During the second half of the 1980s, Toronto experienced a massive office development boom. Hence, Toronto’s share in the owners’ portfolio increased substantially. Although experiencing only moderate office development throughout the 1980s, Calgary’s share increased slightly, while the share of other cities remained stable or even decreased. Toronto’s share continued to increase, and in 2001 about 45% of the largest owners’ portfolio was in Toronto. Over this period (1975–2001), the six largest metropolitan areas held on average more than 90% of the space owned by the largest owners. Other cities were of little relevance to the largest owners. Nonetheless, not all large metropolitan areas were perceived as equally important by these firms. Overall, Toronto and Calgary were preferred to Montreal and Vancouver. In 2001, 63% of corporate portfolios were in the former two metropolitan areas, while 24% were in the latter two (Table 2). Toronto is Canada’s prime economic center and it is also an important urban region within the world-city system (Beaverstock et al., 1999; Courchene, 2001). Calgary, on the other hand, is the oil capital of Canada. Overall, Montreal’s position among the large owners is equal to that of Calgary. But if we take out the portfolio of SITQ, a subsidiary of Quebec’s largest pension fund, which is by far the largest in Montreal, its share among the large owners diminishes from 16% to 5%. Furthermore, large owners had a larger share of metropolitan office stocks in Toronto and Calgary than in Montreal and Vancouver (Table 3). This finding

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IGAL CHARNEY

suggests that Toronto and Calgary were the preferred locations for investment by large property owners. These circumstances are illustrated by an intensive study of a large property development firm, Trizec Corporation. Since its incorporation in 1960, Trizec Corporation (since 1996, TrizecHahn) has been one of Canada’s largest property development firms measured by assets. Throughout the last 30 years Trizec has been one of Canada’s top three property development firms (the other two were Olympia & York and Cadillac Fairview). In 2001 TrizecHahn was the second-largest Canadian-based real estate company with assets valued at USD 6.1 billion.8 TRIZEC CORPORATION, 1960–2001 Uneven development of different areas creates a situation in which some cities grow while others decline. This urges property development firms that seek to profit from shifting conditions across different locations to adjust their operational fields. Successful developers are able to identify and take advantage of these opportunities by shifting resources from devaluating regions to areas of increased valuation. Notwithstanding these switching practices, even large firms with multiple properties in multiple locations only rarely shuffle their entire portfolios. Rather, they retain core properties in key markets and dispose of their peripheral assets in key or peripheral markets, or in both. This practice usually complements building cycles, but it may defy the cyclical tendencies of the real estate market. The study of Trizec required the assembly of several data sources: Trizec Corporation annual reports, newspaper articles, interim reports, and information posted on TrizecHahn’s Web site. Annual reports of the last 30 years (1970–2001) are scrutinized. These provide valuable information. First, they include a detailed list of properties owned by the company. The composition of individual properties and their spatial configuration change on a frequent basis, so it is essential to determine the extent and nature of substitutability. Second, annual reports expose corporate strategies and often elaborate on actions taken by the company. In addition, a large number of newspaper articles on Trizec and on office development published in major Canadian newspapers and reports by Royal LePage, one of Canada’s leading real estate services companies, provided information of the state of office markets in major Canadian cities. During the last four decades, Trizec has transformed from an office development firm to a diversified real estate company that develops and owns office buildings, shopping centers, and retirement lodges, and eventually to a firm that primarily buys and sells office buildings. In the beginning of this period, Montreal was Trizec’s exclusive investment arena; later Calgary, Toronto, and other cities were added. In total, Montreal, Calgary, and Toronto encompassed on average about three-quarters of Trizec’s Canadian office portfolio (Table 4). Until the mid-1970s Montreal was the prime market, then Calgary’s share intensified, and in the mid-1980s Toronto became a major investment destination. These dynamics may suggest that place-specific conditions combined with changing corporate perceptions affected Trizec’s spatial practices.

8

Almost all TrizecHahn’s assets are outside Canada. The largest Canadian-based company is Brookfield Properties with USD 8.1 billion; the majority of its properties are in the U.S.

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SPATIAL FIX AND SUBSTITUTABILITY

TABLE 4. The Distribution of Trizec’s Office Portfolio in Canada, 1968–1999 (%) Metropolitan area

1968

1975

1982

1989

1999

Montreal

100.0a

59.1

35.6

21.7

36.1

Toronto

0

2.6

11.0

28.1

16.2

Calgary

0

17.2

25.6

24.6

24.3

Edmonton

0

7.1

4.2

10.3

7.0

Vancouver

0

8.8

6.0

4.1

3.8

Ottawa

0

0

0

0.6

7.4

Other

0

5.2

17.6

10.6

5.2

Total

100.0

100.0

100.0

100.0

100.0

360,000

880,000

1,300,000

2,020,000

1,500,000

Total rentable space in Canada (square meters) a

In 1968, virtually all office portfolio was in Montreal. Source: Trizec Corporation and TrizecHahn Corporation, annual reports.

Genesis: Place Ville Marie in Montreal, 1960 Trizec was incorporated in 1960 to complete a single-purpose project, Place Ville-Marie (PVM) in Montreal. This project was the first large-scale downtown redevelopment (250,000 square meters of primarily office space) in Canada and the most significant development in downtown Montreal (Nader, 1976). The founders of Trizec were a prominent U.S. developer, William Zeckendorf, and two British-based companies (Collier, 1974). The scale and originality of PVM necessitated a particular set of social agents. This set linked together various agents, in the case of PVM the municipality, the landowner, financiers, the developer, and a major tenant. The mayor of Montreal for almost 30 years (1954–1957, 1960–1986), Jean Drapeau, was a great booster of Montreal (Leveillee and Whelan, 1990). From the beginning of his term, Drapeau was eager to promote Montreal’s corporate image through downtown redevelopment. Place Ville Marie was expected to be the flagship that would establish a new development path and upgrade Montreal’s position within Canada and beyond. One of Canada’s largest railway companies, Canadian National Railways (CNR), was the owner of a large yard of railway tracks in downtown Montreal. In the 1930s a plan for a train station and retail and office buildings was underway. The Depression interrupted development and only the new railway station was completed (1938); in the mid-1950s CNR decided to revive this project. Commercial development (office space and a hotel) on that site was expected to produce revenues for CNR, in addition to the train station which was already in place. Zeckendorf, a shrewd developer with prior experience in large-scale development, recognized the potential opportunity of development on this site. He was able to recruit Canada’s largest bank, Royal Bank, as the project’s key tenant; this in turn encouraged other companies to move to this project. His reputation and business networks enabled him to secure loans

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from British-based companies and make this project feasible (Zeckendorf, 1970; Nader, 1976; Germain and Rose, 2000). All these necessary conditions were fulfilled during the second half of the 1950s. For almost 40 years PVM was Trizec’s core asset in Montreal; it has retained high occupancy rates and commanded premium rents. PVM is still the largest office complex in Montreal; however, its prominence goes beyond size. PVM is a one-of-a-kind property in Montreal. It is the most prestigious business address in Montreal, remaining a symbol long after it was built (Unland, 1997). Moreover, PVM served as a pivotal asset; Trizec developed and acquired additional office buildings in downtown Montreal, taking advantage of the premier stature of Place Ville Marie. During downturns Trizec disposed of some of its peripheral assets in Montreal. In the early 1980s, for example, Trizec sold most of its smallest office buildings in Montreal (up to 15,000 square meters) and kept Place Ville Marie and several medium size buildings (over 25,000 square meters). In its peak years in Montreal, the first half of the 1970s, Trizec was a major owner of downtown Montreal office space, possessing about one-fifth of it.9 The Move to Calgary, 1970 In the 1960s Calgary surpassed Edmonton as the leading center for oil operations in Canada (Zieber, 1975; Nader, 1976); Calgary’s growth accelerated during the 1970s with the steep increase in oil prices. Until the early 1970s virtually all Trizec’s office portfolio was in Montreal (Table 4). In 1971 Trizec purchased two large property development firms based in Calgary which made Trizec the largest publicly traded real estate company in Canada. Following this purchase, Trizec’s geographical scope expanded and included the largest cities in Western Canada: Calgary, Edmonton, and Vancouver. However, until the late 1970s Montreal continued to hold more than one-half of Trizec’s Canadian office portfolio. To determine whether Trizec’s development and investment patterns matched office development cycles in Calgary, the dynamics of office development in Calgary was plotted against Trizec’s office portfolio in that city (Fig. 1). During the last three decades, office development peaked between the mid-1970s and the early 1980s; besides this peak, development in Calgary was on a moderate scale. Additions of office space to Trizec’s portfolio more or less fit the patterns shown by Calgary’s office stock. Later, between the mid-1980s and the mid-1990s, vacancy rates soared and office development was low-profile. Nevertheless, Trizec continued to hold onto its Calgary portfolio and it was one of a small number of property development firms to develop office buildings in Calgary during the late 1980s and late 1990s. During the 1970s, parallel to Alberta’s oil and gas boom and the decline of Montreal as a financial center, Trizec raised its stakes in Calgary. The 1971 purchase included two of Calgary’s largest office complexes: the 60,000-square meter Calgary Place, and the 30,000-square meter Royal Bank Building (at that time total office space in Calgary was

9

In the mid-1970s, Trizec owned about 500,000 square meters of office space in Montreal, most of it in the downtown area. At that time, total office space in downtown Montreal amounted to about 2.5 million (Gad, 1999, Table 1).

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Fig. 1. Annual additions/deletions of office space to Calgary’s office inventory and to Trizec’s office portfolio in Calgary. Source: Trizec Corporation and TrizecHahn Corporation Annual Reports.

approximately 600,000 square meters). In this phase, Calgary Place was Trizec’s core asset in Calgary. Calgary’s office development boom during the 1970s was epitomized by the dominance of oil companies as joint venture partners and as major tenants of the newly built office buildings. From 1976 to 1983 Trizec completed three major office buildings (220,000 square meters in total) in downtown Calgary. These buildings joined Calgary Place to become core assets. Calgary, the command and control center of Canada’s energy sector, became during the 1970s a promising office investment arena (Table 2). In 1976 Trizec moved its executive office from Montreal to Calgary, and in 1980 all Trizec’s operations were consolidated in Calgary. This move was partially fortuitous. The unwillingness of the newly appointed president to move from his accustomed working environment in Calgary forced the new owners of Trizec, a Canadian conglomerate that acquired the company from its British owners in 1976, to set up an executive office in Calgary (Goldenberg, 1981). This personnel matter coincided with Calgary becoming the Western boomtown in the late 1970s and facilitated the increased corporate focus on Calgary. Calgary had a pivotal role in Trizec’s strategy. When oversupply of office space was already evident in 1981, Trizec still demonstrated its confidence in Calgary (a feeling shared by many other risk-loving developers). This confidence was expressed by the launch of Trizec’s largest-ever project in Calgary, Bankers Hall, in 1980. The completion of this two-tower complex of 160,000 square meters was planned for 1984; however, the recession that started in 1982 put this development on hold. The groundbreaking for the first tower was in late 1986, after vacancy rates of top-quality office space dropped substantially (from more than 15% to less than 10%). The construction of the second tower started in 1998 after office vacancy rates dropped to less than 3% and the building was

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Fig. 2. Annual additions/deletions of office space to Toronto’s office inventory and to Trizec’s office portfolio in Toronto. Source: Trizec Corporation and TrizecHahn Corporation Annual Reports.

more than 50% leased (Howes, 1998). During the 1990s, Bankers Hall, the newest addition to Trizec’s portfolio, joined its other core assets in Calgary. Throughout the 1970s Calgary was Trizec’s major office development location. Like Houston, the oil capital of the United States (Feagin, 1987), Calgary became a hot spot for real estate investment; this image was not tarnished even when vacancy rates rose significantly during the 1980s. The existence of large office portfolio and several core assets, in addition to development sites, and the belief that Calgary would rise, convinced Trizec to hold onto its assets. As a result, Trizec kept its core assets (six major office buildings) and sold peripheral assets (two buildings). However, Trizec did not close its eyes to opportunities elsewhere. By 1981, which was the peak year in terms of office development in Calgary, signs of substantial over-building were visible, and Trizec was allured by opportunities in Canada’s largest metropolitan area. Arrival in Toronto, 1984 Toronto became Canada’s largest metropolitan area, surpassing Montreal by the mid-1970s, and the dominant center in terms of service employment. In the following decade it experienced an impressive office development boom (Ley and Hutton, 1991; Gad, 1999). Nevertheless, until the early 1980s Toronto had a minor place in Trizec’s portfolio (Table 4). During the 1980s the increased interest of Trizec in Toronto partially corresponded to the office boom there. During this decade, as an office development boom took place in Toronto while Calgary experienced slower growth, Trizec increased its office holdings in Toronto. Likewise, as a severe recession hit Toronto in the early 1990s, Trizec sold the majority of its Toronto portfolio (Fig. 2).

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Realizing in the early 1980s that Calgary was experiencing a downturn, and looking for further diversification, Trizec turned to Toronto. Toronto’s office market was booming and Trizec wanted to capitalize on this growth. Consequently, Trizec’s stake in Toronto’s office market rose substantially, from 11% of its Canadian portfolio in 1982 to 28% in 1989 (Table 4). During the mid-1980s the focus of Trizec’s strategy was on major financial centers in North America. Trizec considered Toronto, along with New York and Los Angeles, such a center. Trizec identified these cities as “markets offering long-term potential due to their strong financial service-based economies and their consistent record of overall growth” (1986 Annual Report, p. 13). It was looking for ways to gain from the boom which made Toronto a more lucrative market than Calgary. In 1984 Trizec opened a regional office in Toronto and invested in the Toronto-based property development firm Bramalea Limited (1984 Annual Report). One of the major attractions of Bramalea was its Toronto portfolio, in particular its substantial office portfolio. In 1983 over one-half of Bramalea’s Canadian office portfolio was in Toronto and a number of projects were in the planning and development stages (Bramalea Limited, 1982 and 1984 Annual Reports). Trizec’s incremental increase in ownership in Bramalea between 1984 and 1988 reflected its rapidly growing interest in Toronto. In 1984 Trizec acquired a 31% ownership interest in Bramalea; in 1986 Trizec increased its share to 65% and in 1988 to 70%. Unlike the situation in Montreal and Calgary, Trizec lacked core assets in Toronto. Its portfolio consisted of various properties, most of them owned by Bramalea. In the second half of the 1980s Trizec launched the development of its future core asset in Toronto. The construction of a 57-story building, Bay-Adelaide Centre, located at the heart of the Financial District, started in late 1989. Soon after, vacancy rates began to soar, and as a result in 1993 the project, consisting of an underground parking garage and a partial elevator core, was mothballed indefinitely. It is reasonable to argue that since Trizec had no core property in Toronto it sold the lion’s share of its Toronto portfolio in 1992, as soon as recession became imminent. However, Trizec kept the Bay-Adelaide development site to be its future core property in Toronto, and during the late 1990s it tried to revive this project (Howlett and Reguly, 1998; Zehr, 1998). Finally, it was the last property to be sold (Bertin, 2001a). Epilogue: Departure from Canada, 2000 Canadian real estate investment in the United States has been of a considerable scale (Goldenberg, 1981; Meyer, 2001). Trizec, as most other large Canadian property developers, operated in the United States. Trizec enlarged its U.S. portfolio from less than 10% of its office portfolio in 1971 to almost one-half in 1981, and to three-quarters in 1998 (Table 5). Throughout the last three decades its spatial preferences in the U.S. have changed (Table 6). As time progressed, spatial preferences became more focused on the largest markets such as New York, Chicago, and Los Angeles, and those with high growth rates like Houston, Dallas, and Atlanta; these are considered core markets. Since the second half of the 1990s, Trizec’s corporate strategy became more spatially opportunistic than before. In 1996 the owner of Canada’s largest gold-mining company, Barrick Gold, acquired control of Trizec and renamed it TrizecHahn. Frequent properties transactions and the capture of value by disposing and repositioning portfolio into higher-growth

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TABLE 5. TRIZEC’S OFFICE PORTFOLIO IN CANADA AND THE UNITED STATES, 1971–2001a

Year

Canada (square meters)

% of office portfolio

United States (square meters)

% of office portfolio

Total office portfolio (square meters)

1971

708,000

90.7

78,000

9.3

781,000

1981

1,177,000

51.2

1,119,000

48.8

2,296,000

1996

1,010,000

41.4

1,427,000

58.6

2,437,000

1998

1,428,000

24.2

4,466,000

75.8

5,894,000

2001

0

0.0

4,540,000

100.0

4,540,000

a

For most of this period, the entire office portfolio was in Canada and the United States. In the late 1990s Trizec had a small office portfolio in Europe. Source: Trizec Corporation and TrizecHahn Corporation, annual reports.

TABLE 6. TRIZEC’S OFFICE PORTFOLIO IN THE UNITED STATES, 1975–2001 1975 Prime markets

1989

2001

Los Angeles

Houston

New York

Detroit

Los Angeles

Houston

Atlanta

Dallas

Dallas

Detroit

Chicago

Stamford, CT

Washington, DC

Denver

Atlanta

Kansas City

Los Angeles

Minneapolis Secondary markets

Oakland

Charlotte

Culver City, CA

Pittsburgh

Atlanta

St. Louis

San Diego

Minneapolis

Source: Trizec Corporation 1975 and 1989 Annual Reports; Trizec Hahn Corporation 2001 Annual Report.

assets became its trademark. This opportunistic strategy was evident in the case of its Canadian and European portfolios. During the late 1990s TrizecHahn came to consider the U.S. office market superior to the Canadian. Better returns from assets in the United States, where economic growth was robust and capital more readily available for projects, spurred TrizecHahn to reorganize its holdings (Theobald and Nguyen, 2000). Consequently, in 2000 and early 2001 TrizecHahn sold its entire Canadian office portfolio. This portfolio included core

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properties such as Place Ville Marie in Montreal, Bankers Hall in Calgary, and the Bay-Adelaide development site in Toronto. In 2000 it also decided to sell its short-lived European portfolio (2000 Annual Report). Finally, in mid-2001 TrizecHahn decided to move the bulk of its head office operations to the U.S. (Bertin, 2001b). Thus, after four decades, TrizecHahn dissociated itself from the Canadian property market.10 CONCLUSIONS: FIXITY AND SUBSTITUTABILITY IN GEOGRAPHICAL CONTEXT Following other scholars (Logan and Molotch, 1987; Feagin and Parker, 1990; Haila, 1991) who emphasize the role of property development firms in the modeling of urban environments, this research pursued an operational framework that lays the emphasis on the developer. Property development firms operate in highly contested and complex settings which are neither entirely rigid nor completely flexible; power, capital, and knowledge make these agents one of the major shapers of urban development. The locational preferences of Canada’s largest development firms illustrate how these firms take advantage of uneven conditions across space. Given that conditions also change over time, property development firms have to consider constantly their spatial positioning, making spatial switching an important strategy to combat fluctuating circumstances. Nonetheless, once structural conditions are difficult, commitments spread out, and faith replaces rational thinking, spatial switching is an inadequate strategy. This is especially applicable in the case of two of Canada’s largest development firms, Olympia & York and Campeau (Hallsworth, 1991; Ghosh et al., 1994). Also, there are limits to spatial flexibility of capital deployment; although it seems that the degree of flexibility is infinite, in fact it has fairly narrow limits. The actions of property development firms are restricted by structural conditions as well as their own previous decisions on capital investment. These constraints determine a quite rigid structure in which developers have to position themselves. This structure tends to perpetuate urban processes that were previously in motion. The spatial fix-substitutability framework explores the practices of property development firms; this framework provides an agent-based perspective of urban change. Power entrenched in large property development firms facilitates and determines the scope of development. Developers have a spatial modus operandi. Instead of diversifying into a large number of locations across the country, large property development firms prefer to focus on selected markets, which become key markets for these firms. Large sums of capital invested in core properties situated primarily in downtown areas attract further investment and solidify these areas as the most important corporate settings. An important component that anchors developers to particular places is the existence of core properties. These define a particular territory in which the developer enjoys a comparative advantage. Core properties gain prestige and command premium rents, making them highly valuable assets. The importance of core properties transcends their size since they

10

On May 8, 2002, TrizecHahn completed its plan of arrangement, with the launch of Trizec Properties, a publicly traded U.S. real estate investment trust (REIT). In addition, Trizec Canada, a Canadian company, was created, which owns a 40% stake in Trizec Properties (http://www.trz.com).

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generally act as magnets for the development or acquisition of other assets. Over time, these properties become landmarks in urban landscapes, and for the developer they turn into strategic assets. Other properties are held for opportunistic purposes (better than average return) and their turnover time is more frequent. The framework of spatial fix and spatial substitutability has several implications for understanding the Canadian urban hierarchy, the internal structure of cities, and metropolitan property markets. First, it provides further evidence for the dominance of Toronto within the urban hierarchy, the rise of Calgary, and the declining position of Montreal. Toronto has attracted by far more investment in office development from top Canadian developers than any other city in Canada. Nevertheless, except in Toronto, investment practices do not simply follow the rank-size order of the urban hierarchy. The most notable exception is Calgary. This has been a more important destination for the largest Canadian developers than the much larger metropolitan areas of Montreal and Vancouver. This finding supports the argument about contraction of the Canadian core from a bi-polar (Toronto and Montreal) to a single core, which rests primarily on Toronto and southwestern Ontario (Yeates, 1985). The emergence of incipient cores in Western Canada around Vancouver and Calgary-Edmonton should have elevated Vancouver and Calgary higher among the priorities of Canadian developers, but in fact Calgary has gained prominence over Vancouver as regards large Canadian development firms. This bias may be explained by Vancouver’s Asia-Pacific link. Unlike Calgary, which became a major investment destination among Canadian developers, Vancouver has attracted far more foreign property investors, particularly from the Pacific Rim (Edgington, 1995; Olds, 2001). Second, the practices of the large developers give emphasis to the urban core. One reason for this dominance is the fact that virtually all core assets are situated there. Property development firms hold assets as income-producing properties, so they have vested interests in keeping them intact. For this reason developers need to ensure stability and the constant thriving of downtown areas as prime investment environments, and for this purpose they cooperate with local governments (Collier, 1974; Lorimer, 1978). Thus, is spite of increasing suburbanization, downtown areas still constitute important nodes of high-order services and accommodate the bulk of office space (Gad, 1999; Gad and Matthew, 2000; Coffey and Shearmur, 2002). Third, any metropolitan property market, whether residential or office, is differentiated into submarkets (Adams, 1991; Dunse et al., 2002). In office submarkets, core assets play a dominant role. The size and distinctiveness of core assets put them in a commanding position within specific submarkets; some of these properties became icons within their particular downtown settings, for example Place Ville Marie in Montreal, Toronto-Dominion Centre in Toronto, and Pacific Centre in Vancouver. Consequently, these properties function as yardsticks and command the highest rents in their respective submarkets and in the entire metropolitan market. Large property development firms build their entire portfolios around their core assets. Once a core asset is developed or acquired it is possible to assemble a meaningful portfolio at that location: a large portfolio clustered in relative proximity that fosters economies of scale. Property development firms are not just developers. They also own and manage properties. As such they provide various services for their tenants such as leasing, maintenance, and cleaning. The cost of these services is reduced through clustering practices.

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The research presented in this paper has added further evidence on the practices of property developers and their impact on particular settings. Even though global property developers exist, nationwide and local developers are much more prevalent and their impact is more discernible. As suggested by Bryson (1997), local and smaller developers have different motives for development from those of nationwide and larger developers. The practices of spatial fix or spatial substitutability may support the general notion of a widening gap between top-tier cities and provincial cities. Developers prefer the former and ignore the latter; therefore their practices both reflect and strengthen the ongoing tendency of growing spatial disparities. Furthermore, there are significant gaps between cities on the upper urban tier. The prominence of Toronto and the decline of Montreal as observed by the practices of developers conform to global processes of growing concentration of power within a diminishing number of cities. REFERENCES Adams, J. S., 1991, Housing submarkets in an American metropolis. In J. F Hart, editor, Our Changing Cities. Baltimore, MD: The Johns Hopkins University Press, 108–126. Amin, A. and Thrift, N., 1992, Neo-Marshallian nodes in global networks. International Journal of Urban and Regional Research, Vol. 16, 571–587. Ball, M., 1986, The built environment and the urban question. Environment and Planning A, Vol. 4, 447–464. Beauregard, R. A., 1994, Capital switching and the built environment. Environment and Planning A, Vol. 26, 715–732. Beauregard, R. A. and Haila, A., 1997, The unavoidable incompleteness of the city. American Behavioral Scientist, Vol. 41, 327–341. Beaverstock, J. G., Lorimer, H., Smith, R. J., Taylor, P. J., and Walker, D. R. F., 1999, Globalization and World Cities: Measurement Methodologies. Loughborough, Leicestershire, UK: University of Loughborough, Department of Geography, GaWC Bulletin 2. Bertin, O., 2001a, Brookfield to revive Bay-Adelaide Centre. Globe and Mail, February 1. Bertin, O., 2001b, Trizec moves some operations to U.S. Globe and Mail, June 27. Bryson, J. R., 1997, Obsolescence and the process of creative reconstruction. Urban Studies, Vol. 34, 1439–1458. Charney, I., 2001, Three dimensions of capital switching within the real estate sector: A Canadian case study. International Journal of Urban and Regional Research, Vol. 25, 740–758. Coakley, J., 1994, The integration of property and financial markets. Environment and Planning A, Vol. 26, 697–713. Coffey, W. J., 2000, Canadian cities and shifting fortunes of economic development. In T. Bunting and P. Filion, editors, Canadian Cities in Transition: The Twenty-First Century (2nd ed.). Toronto, Ontario, Canada: Oxford University Press, 121–150. Coffey, W. J. and Shearmur, R. G., 1997, The growth and location of high order services in the Canadian urban system, 1971–1991. Professional Geographer, Vol. 49, 404– 418.

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