Monday, November 15, 2010

Dense and density

Saturday's SP (Nov. 12/10) published an interesting article on the challenges of increasing downtown residential density. It stated the initiatives the city has already instituted to encourage residential development by builders. But it sadly missed the reasons why, particularly the baby boomers, will not jump into the fray.

As long as condominium property tax is the equivalent to single dwelling residences there is no incentive to make the move to a multiple dwelling complex. Why would a middle-aged couple down-size their living/storage space, pay for a parking stall(s), and add to their monthly costs, over and above property tax, a condo fee of several hundred dollars? They are better off staying put and spending less than the monthly condo fees to hire help for the yard work and snow removal.

The grocery store issue is the ultimate chicken/egg riddle. No grocery store means travelling outside downtown for basic necessities. Without the density, the grocery store is not viable. Business is not going to take a loss for years waiting for the density to build and make the business profitable.

Lastly, land in Saskatchewan is still cheap, comparatively speaking. A family can still afford to buy their own patch of land and have their dream home with picket fence in Saskatoon or surrounding area. We were all raised with that dream. And when baby turns to toddler, parents want the yard, playgrounds, neighbourhood friends and schools that they had when growing up. The caged balcony for junior to play in doesn't cut it as a substitute.

I think the city should look more to offering incentives to condo owners rather than developers. Otherwise it would be dense to make the shift from private home to condo.


  1. I'd contend we also need to start encouraging the development of mid-level priced condo's as well, The KG, The Bay lofts, and the Rumley, and the spandina/24th (does that building have a name, the red one), while all great projects, they are higher end developments.

    If we are going to reach 10,000 residents downtown they will have to be a mix of income levels.

    How do we do this? not sure.

    I would suggest that offering the incentives to developers is worth a shot, it might jump-start more developments and start filling in all of those empty spaces downtown.

    I also agree that a grocery store is quite the puzzle. I'd suggest that if the city wants to seriously encourage a full-service grocery store downtown that they offer some major incentives - perhaps a 10 year (or more) property tax break or something else along those lines.

  2. Did you read the article? The couple that was interviewed said that they added up the costs/expenses of their previous home and their condo and they save money!

    "Although there was a premium to pay for downtown real estate, the couple tabulated their annual savings compared to suburban living: One less car payment, no gas or insurance, less space to furnish, and no yard to maintain.

    They estimated the savings would be $20,000 per year." -

    Sure downtown living isn't for everyone, it is a lifestyle choice the same as suburban living isn't for everyone. I would find it incredibly inconvenient and boring to live in the suburbs.

    You are looking at in a bit too narrow of a way. Property tax is only one cost of many that go along with the choice of where you live. I'd definitely get behind a reduction in residential property taxes downtown, but as per the article, when you add up parking/transportation costs, maintenance costs, property tax etc. it can be significantly cheaper than suburban living, then add in that some people genuinely prefer living in a condo or in a more urban setting and it's a quite reasonable choice for many people.

    As for the suburban dream...yes, it's still out there, but it is becoming more costly to individuals and all tax payers and less prevalent than it once was. It's a choice people make. If that's what people want, that's fine, our taxes go up, but to assume it is what everyone wants is a bit dense.

    Interestingly enough.......up until recently the city did offer the same tax break to condo owners that is now being offered to condo builders. It seems like it did help (i.e. 2nd ave lofts, the river front, etc.), but obviously didn't have the effect that assume it should.

  3. Can we please just end the talk of having a grocery store downtown for the next 15 years?

    How many times must it be endlessly recycled and discussed, when the reality is that it simply is not sustainable.

    Anyone who thinks otherwise is naive, does anyone think that another major grocer is going to come in take a loss for the next decade (sorry tax breaks don't even begin to cover the losses), to be 'the nice guy' for downtown residents?

  4. From what I have been lead to believe, the last grocery store (extra foods, or whatever incarnation it was) was making a profit, just not a big enough profit.

  5. That was my understanding as well.

    Saskatoon's chain grocery stores just aren't interested in customers who drag anything less than 20 kilos of nutmeg, 45 pounds of bananas, and 20 hectolitres of soda out the front door.

    Buying anything less makes you a bad consumer, and therefore a bad human being. Even worse, it jeopardizes Loblaw's $650 million annual profit.

  6. From what I have been led to believe, the problem lies in the other direction.

    The customers generally prefer the 20 kilos of nutmeg, or 45 pounds of bananas and that was the main issue.

    Customer treated the downtown grocery stores as if they were convenient stores picking up the daily necessities and odds and ends, while preferring to do the bulk of their shopping on the trips to the Superstores, and bigger chains, I can only assume due to the price savings.

    Read the numbers, the majority of the users of downtown grocery store do so on a regular basis, however, admit to still making regular trips to the Costcos/Superstores to stock up the bulk items.

    A grocery store can not afford to operate long term on minimal shopping. The downtown folks who want a grocery store need to realize that the grocery store (which will be limited in size and likely have slightly higher prices) needs to be the MAIN grocery store. They cannot have the luxury of a full fledged downtown store for the daily shoppings and the Costcos for their bulk non-perishables.

    As for they were making a profit, if you noticed the numbers none of the operators drew any compensation during the operation. So if you propose that these people work for free so that downtown residents can have their cake and eat it too then you need to rethink your position.

  7. The Extra Foods in the old Army & Navy building?

    God no, that store was bleeding money faster than you could imagine. Only reason that it stayed open as long as it did was the lease and the fact the company saw some inherent value in maintaining a presence downtown when no others were.

    In the end it just cost too much money to keep open.

  8. "A grocery store can not afford to operate long term on minimal shopping. The downtown folks who want a grocery store need to realize that the grocery store (which will be limited in size and likely have slightly higher prices) needs to be the MAIN grocery store. They cannot have the luxury of a full fledged downtown store for the daily shoppings and the Costcos for their bulk non-perishables"

    Then how can the Shop Easy on 7th and the one on Clarence still be viable? I haven't seen anybody dragging hectolitres of soda out of those stores.

  9. It isn't about dragging hectolitres out of the store, and your obvious continued reference to the bad jokes leads me to believe you don't honestly understand the grocery business in the least, which makes your opinion all the more surprising.

    Grocery stores work mainly off basket sizes. The locations that you mention are different for a few reasons. One the cost of overhead (ie. rent, delivery, etc.) is much less in those locations that they are in downtown. Secondly, and perhaps more importantly there is room for parking at both locations (more so I believe at the Clarence Extra Foods). This is relevant in a couple ways. One it creates easier access. Secondly, it allows for customers to drive and therefore have larger purchases. If you take a look on their websites, and through industry measurements, the entire industry is measured on 'basket of goods'. As in chains compete for the lowest cost per basket (a basket is usually made up of several staple items- like 2L milk, loaf of bread, etc...). Similarly, individual stores attempt to maximize each customer's personal basket, as in make the most per visit. The downtown stores are limited in that due, in part to parking accessibility but mostly due to customer preferences, their basket sizes are nowhere near the those of other stores. Two exact same stocked stores, one in downtown and one in Churchill strip mall, will have vastly different sales patterns. Customers are partly to blame, and logistics are partly to blame. It's not about the hectolitres, but rather it is about the variety of items being purchased at each. Those who have ability to drive and park close are more likely to buy larger baskets and thus give a higher chance of turning a profit. Stores in the downtown area generally see smaller purchases (usually a bag or less), and similarly market research also shows that people who generally tend to purchase daily groceries (ie. quick shopping for daily supper) also tend to withhold from purchasing extras on those trips (ie. when getting daily meat/veggies will not pick up the laundry soap they are running low on). Rather those people prefer to wait to purchase those items and other non perishables on bi-weekly/monthly visits to larger outlets, who carry larger quantities at a cheaper price.

    This isn't some myth, this is actual charted research from the industry.

    Please spare me the reference to larger cities. I could give you the run down of the differences, but this post is getting long enough as is. As for my source, it is mostly online, however, I spend 10 years working for a large grocery chain.

  10. Congratulations. I spent five working for a small but very successful grocer, but I'm glad you could enlighten me with the trade secret that retailers want to maximize sales.

    The point remains the same and your verbose post illustrated it: There is money to be made in small grocery stores - large chains are not interested in serving this market.

  11. My mistake, I would have assumed even the baggers would have a basic understanding of the industry after 5 years. I should never assume anything when dealing with clearly so biased they want to ignore basic facts.

    If there is such a market, why has no business or anyone (despite the incentives offered by city) stepped up and built one downtown? Or I guess more appropriately why has no one, other than the one that was quickly run out of business because the downtown did not support it, built a grocery store downtown to serve this apparent market?

    The downtown does not need a grocery store nor does it want one, they had one and it became clear the market could not or would not support it. Quit spreading the myth that there is a market there before some other poor sole goes into bankruptcy attempting to fill this so called demand

  12. You don't need customers pushing three carts of groceries out of a store to make a profit. You do, however, need that to happen to make a $650 million profit.

    Your Loblaw-sycophantic rambling has failed to grasp the basic point of what was said: there is money to be made in small grocery stores, but the chains that serve Saskatoon are not interested in this business model.


Note: Only a member of this blog may post a comment.