Report to Rapport au: Finance and Economic Development Committee Comité des finances et du développement économique 5 July 2016 / 5 juillet 2016

Transcription

1 1 Report to Rapport au: Finance and Economic Development Committee Comité des finances et du développement économique 5 July 2016 / 5 juillet 2016 Submitted on June 28, 2016 Soumis le 28 juin 2016 Submitted by Soumis par: Steve Kanellakos, City Manager / Directeur municipal Contact Person Personne ressource: Saad Bashir, Director, Economic Development and Innovation / Directeur, Service de l innovation et du développement économique , x / Saad.Bashir@ottawa.ca Ward: CITY WIDE / À L'ÉCHELLE DE LA VILLE SUBJECT: Ottawa Economic Update File Number: ACS2016-CMR-OCM-0023 OBJET: Mise à jour économique d Ottawa REPORT RECOMMENDATIONS That the Finance and Economic Development Committee receive this report for information. RECOMMANDATIONS DU RAPPORT Que le Comité des finances et du développement économique prenne connaissance du présent rapport à titre d information.

2 2 BACKGROUND The Department of Economic Development and Innovation (EDI) understands that access to research, data, and information help organizations make informed decisions that position them for success in the global marketplace. This is why EDI has taken a proactive role in researching and analyzing economic development trends in Ottawa, as well as increasing the quantity and quality of data available to local businesses and economic development stakeholders. Over the past four years, the primary vehicle for this research has been the monthly Economic Development Update report, which provides an overview of Ottawa s economic health with a focus on the following areas: labour market, real estate, and construction. Since the fall of 2015, EDI has also begun to issue special editions of the Economic Development Update, which take a more in-depth look at different aspects of the local economy. To date, these special edition reports have examined the following topics: employment in Business Improvement Areas; the Capital Investment Track program; commercial real estate in the Ottawa office market; hotel performance; and the tourism profile of visitors to Ottawa. The monthly Economic Development Update and the special edition reports are shared with the City s senior management team and business leaders within the community. Members of Council also receive a copy of the reports, along with an information previously distributed memo on a monthly basis. At the April 5, 2016 meeting of the Finance and Economic Development Committee, Mayor Watson directed EDI staff to present an overview of the Economic Development Update and associated reports at a future meeting of the Committee. This report provides an overview of the information included in this presentation. DISCUSSION The Economic Development Update presentation to Council is divided into a series of topics as outlined below. Unless otherwise noted, the data being discussed is from 2015, which represents the most recent annualized data available. It should also be noted that the Economic Development Update and related special editions rely on a number of public sources for information, including: Statistics Canada, the Canada Mortgage and Housing Corporation (CMHC), the Conference Board of Canada, the Province of Ontario, and several organizations with expertise in the commercial real estate industry, including Altus Group, Avison Young, Colliers International, CBRE, Cushman & Wakefield and Jones Lang LaSalle (JLL).

3 3 1. Economic Performance Gross Domestic Product (GDP) is one of the primary indicators used to measure the health of an economy. While Ottawa has a robust GDP of $65 billion, it is instructive to note that it is considerably smaller than other cities in Canada, including Edmonton ($88 billion), Calgary ($116 billion), Vancouver ($123 billion), Montreal ($167 billion) and Toronto ($318 billion). On a global scale, the entire GDP of Canada is $1.7 trillion, which is only slightly larger than the GDP of New York City ($1.4 trillion). These comparisons help to underscore the relative size of Ottawa s (and Canada s) economy. While Ottawa s overall GDP may be smaller, comparatively speaking, on a per capita basis Ottawa residents actually fare better than their counterparts in a number of other capital cities around the world (e.g., Moscow, Tokyo, and Beijing). Put another way, the fact that Ottawa s population is smaller means that, at the level of the individual, the proportionate share of the GDP is larger. Looking more closely at the performance of the local economy over time, GDP growth in Ottawa has faced some turbulence in recent years. Following the global recession in 2008, Ottawa not unlike the province of Ontario and the rest of Canada saw its real GDP growth fall significantly and consistently for number of years, bottoming out at less than 0.5 per cent in Since then, however, we have seen a bit of a recovery in the performance of the local economy. Moreover, with the anticipated (as well as confirmed) federal government investments in Ottawa, the city s real GDP growth is forecasted to rise by over two per cent in While still modest and not yet a return to prerecession growth levels, the trajectory of local GDP growth is moving in the right direction. 2. Employment in Ottawa The Ottawa labour force is comprised of just over half a million people (566,900). Despite commonly being perceived as a government town, a majority of Ottawa s labour force is actually employed by the private sector (65 per cent vs. 32 per cent by the public sector). That being said, the importance of the public sector cannot be understated given that a sizable proportion of the private sector sells its products and services to the different levels of government in Ottawa. At the industry level, health and education is currently the largest employment sector in Ottawa, followed by public administration. Notably, 2015 was the first time in Ottawa s history that employment in the health and education sector has surpassed public

4 4 administration employment. This shift in employment can be attributed at least in part to an aging demographic not only in Ottawa, but across Canada. In 2015, Ottawa had an annual unemployment rate of 6.3 per cent. Historically speaking, Ottawa s rate of unemployment is consistently lower than both the national and provincial averages. Ottawa also tends to post one of the lowest unemployment rates among Canada s largest Census Metropolitan Areas (CMAs). 3. Ottawa Real Estate Market As with most other cities in Canada, the Ottawa housing market was negatively impacted by the great recession, with the overall number of housing starts dropping sharply between 2008 and Since then, there has been some volatility in the market particularly with respect to condominium starts. Historically speaking, however, Ottawa has had one of the most stable real estate markets among the major CMAs in Canada. It is also one of the most affordable, with single family homes in Ottawa consistently priced below those in Calgary, Montreal, Toronto, and Vancouver. In the area of commercial real estate, Ottawa is one of Canada s most important office markets, supporting an estimated 300,000 employees in approximately 40 million square feet of office space. The Ottawa office market is currently experiencing one of the highest vacancy rates in its history (10.6 per cent citywide). While slightly lower than the citywide average, the vacancy rate in the downtown is also at a historical high (8.9 per cent). On a more positive note, areas such as Kanata are experiencing historically low vacancy rates, thanks in large part to an influx of technology companies to this part of Ottawa. Looking ahead, the forecast for this sector is also fairly positive, as industry analysts are anticipating a turn-around beginning in Tourism in Ottawa Ottawa s tourism sector is an important component of the local economy. As the nation s capital, the city is home to a vast array of attractions that make it a key destination for tourists, corporate and convention travel. According to the most recent data available, the Ottawa-Gatineau CMA welcomed 10.5 million visitors in 2012, an increase of 5.6 per cent over Visitors to Ottawa are slightly more likely to make day trips as opposed to overnight trips to the capital (5.6

5 5 million as opposed to the 4.9 million). Of those staying overnight, a vast majority visited from other cities within Canada and came to visit friends and relatives. Within this industry, Ottawa hotels make significant annual contributions to the local economy in terms of employment, tax revenues to the City, and marketing of Ottawa as a tourism destination. One proxy for the health of this industry is the hotel vacancy rate. On this indicator, Ottawa hotels fare extremely well, having one of the lowest (and most stable) vacancy rates in Canada. EDI is also monitoring trends in the sharing economy. In relation to the tourism sector, Ottawa saw the number of active Airbnb listings more than double over the course of 2015 (from 566 in January to 1,314 in December). RURAL IMPLICATIONS There are no rural implications to receiving this report for information. CONSULTATION Public consultation was not required as this report is administrative in nature. COMMENTS BY THE WARD COUNCILLOR(S) N/A ADVISORY COMMITTEE(S) COMMENTS Advisory Committees were not consulted as this report is administrative in nature. LEGAL IMPLICATIONS There are no legal impediments to receiving the information in this report. RISK MANAGEMENT IMPLICATIONS There are no risks associated with accepting this report for information. ASSET MANAGEMENT IMPLICATIONS N/A FINANCIAL IMPLICATIONS There are no financial implications to receiving this report for information.

6 6 ACCESSIBILITY IMPACTS The Economic Development Update and special editions of this report adhere to the regulations for the production of reports set out in the Accessibility for Ontarians with Disabilities Act (AODA). ENVIRONMENTAL IMPLICATIONS There are no environmental implications associated with this report. TECHNOLOGY IMPLICATIONS There are no technology implications associated with this report. TERM OF COUNCIL PRIORITIES The Economic Development Update and special edition reports is connected to the Term of Council Economic Prosperity Priority: Use Ottawa s unique combination of recreational, social, cultural and business assets, and natural environment and physical infrastructure to attract enterprises, visitors and new residents, while at the same time developing and retaining local firms and talent. DISPOSITION EDI staff will continue to monitor trends related to the Ottawa economy and bring this information forward to Council on a regular basis.