Sep 18, 2020

The Globe and Mail Coronavirus information The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens. Bookmark Please log in to listen to this story. Also available in French and Mandarin. This translation has been automatically generated and has not been verified for accuracy. Full Disclaimer Fred Lum/The Globe and Mail Before the pandemic struck, crowds of downtown office workers would swarm in and out of Toronto’s main train station twice each weekday, a mass of humanity so thick that trying to walk against the stream earned the nickname “salmoning.” These crowds are now a distant memory and the network of underground tunnels – known as the PATH – that connects the skyscrapers and transit has fallen eerily quiet. During lunchtime this week, many of the restaurants in the food courts throughout the PATH were closed. Staff, security guards and cleaners outnumbered patrons. At one food court, every restaurant was shut except for a fast-food Shanghai 360 and a coffee shop. There were decals on the floor directing traffic and showing people where to wait in line for the food. But no one was waiting. Story continues below advertisement At a Tim Hortons, four masked staff stood behind the counter, while one served the sole customer. Some of the seating was blocked off in an attempt to observe physical-distancing requirements. But only a handful of people were using tables, including two workers on a break. The pandemic has hit fashion retailers, restaurants and their commercial landlords particularly hard, and perhaps nowhere more so than the PATH, which is highly reliant on the office economy and public transportation users. Tunnels are a hard sell for people worried about being inside. And while many of Toronto’s above-ground restaurants have been able to create makeshift patios, food courts buried under the financial district don’t have that option. Fred Lum/The Globe and Mail A few office workers were in the tunnels this week. But with COVID-19 cases back on the rise in Toronto and Ontario’s provincial government restricting indoor gatherings again, the future of the subterranean space is in question. The exact scale of the downturn here is hard to measure. No one seems to track vacancies. And no one keeps updated pedestrian counts for the tunnel network. However, the numbers of transit passengers using nearby train stations offer an indicator of how few people are coming to the area. At King subway station, on the Toronto Transit Commission network, the number of passengers disembarking each morning plummeted by 95 per cent in March and April before recovering somewhat. By late August it remained about 89 per cent below the pre-pandemic norm. At Union Station, which connects directly into the PATH and serves both the TTC and the regional commuter agency GO Transit, the number of people using the facility cratered once COVID-19 struck. The number of people in the GO terminal at Union dropped off almost to zero in late March and by August was still less than 10 per cent of the pre-pandemic level. TTC passengers using the station dropped by 95 per cent before edging up, in the most recent figures, to around 88 per cent below normal. Story continues below advertisement “Normal down there [in the PATH] is just bustle, you know what I mean, and we’re a long way from bustle,” said Grant Humes, executive director of the Toronto Financial District BIA. “To me that’s what the PATH was always all about, arriving in rush hour and, you know, putting your elbows up and working your way to your office. I mean, it’s almost something to look forward to now.” The first of the tunnels that now form part of the PATH dates to 1900. Now stretching 30 kilometres, the network connects more than 75 buildings and is lined with shops and restaurants, forming a retail ecosystem offering almost anything you might need. Without setting foot outside, people working in the towers could have a sit-down meal or pick up dry cleaning on the way to the train. There were fast-food lunch outlets, jewellery stores and clothiers. You could get a haircut, buy a book or grab drinks with colleagues. According to the City of Toronto, there were 4,600 jobs in the PATH before the pandemic, and the area generated approximately $1.7-billion in annual sales. Without most of its customers, though, the ecosystem has lost its life force. “The question is how are retailers performing in the PATH and the answer is terrible,” said Tim Sanderson, executive vice-president of real estate services firm Jones Lang LaSalle Inc. “Some tenants have days with no sales.” Story continues below advertisement Karl Littler, the senior vice-president of public affairs for the Retail Council of Canada, said the absence of transit users, office workers, tourists and students has combined into a “toxic mix,” making merchants on the PATH suffer more than most retailers. Fred Lum/The Globe and Mail “They are unquestionably having a harder time,” he said. “If everyone stays home, it will be a disastrous outcome for those businesses.” Some shops in the PATH have taken a hiatus. Others closed permanently. Scattered along the tunnels are sections of papered-over glass. “Exciting New Leasing Opportunity,” reads one, while another promises: “Your path to style.” Without the crowds, it’s unclear how long some of the remaining businesses can survive in a location geared toward office workers. For example, Japanese clothing store Uniqlo Co. Ltd. used to be packed with shoppers. It’s in a prime spot in the PATH, with escalators practically leading to its front doors. During this week’s lunch hour, there were two people in the store. Merchants such as Uniqlo were willing to pay a level of rent that assumed big crowds would walk by morning and night, and that office workers would pop down for lunch or shopping. Story continues below advertisement No longer. Some of the biggest office users, such as Toronto-Dominion Bank and Bank of Nova Scotia, are allowing employees to work from home until January. Fred Lum/The Globe and Mail Others are bringing staff back on a rotating basis and limiting the number of staff in the office at any given time. For example, accounting and consultancy firm KPMG LLP has less than 5 per cent of its staff in the office and expects remote working to continue throughout the pandemic. Mr. Sanderson at Jones Lang LaSalle said that one landlord told him that a building with normal occupancy of 5,000 people was being used by 20 people daily. “Many clients in our downtown Toronto office towers still have very limited occupancy, which is reflective of the lack of foot traffic in the PATH and the reason many retailers, food vendors have not reopened their businesses,” said a spokeswoman for Cadillac Fairview, which owns 40 office towers across Canada, including the TD Centre complex of six skyscrapers in the heart of the PATH. Also, the few people who remain in the towers are less likely to visit the PATH. The logistical hassle of getting up and down elevators that can now hold only a few people discourages daytime excursions. Some firms have rules against casual trips out of the office during the day. Oxford Properties, which operates a few office buildings in the financial district, said it has created food delivery pickup areas in its lobbies to avoid crowding and support its retailers who have added delivery and pickup to their services. Fred Lum/The Globe and Mail Urban and downtown boosters remain confident the core will revive, noting that cities have been written off many times before and always came back to life. It remains unclear, though, what a post-COVID downtown will look like. If it involves physically distanced offices with fewer people, that will reduce the potential customer base in the PATH. Story continues below advertisement “The nature of the amenities could change, you know, the retail mix,” said Mr. Humes, with the BIA. “Will we definitely need, you know, 20 coffee shops within the space of five buildings? No. But maybe you’ll get by with 15 but then what are the new uses that are going to appear?” Not everyone is as convinced about a recovery. While office landlords are optimistic, the market has soured on commercial real estate owners. Ivanhoé Cambridge, a Montreal-headquartered global real estate company building a massive office complex in the core, expects to post a loss this year. And Brookfield Property Partners, the Toronto-based global real estate company that owns several office towers in the financial district, has lost about 35 per cent of its value on the stock exchange since the beginning of the year. Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today . 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