Geographical shifts

Geographical change within the Central Zone economy has been dominated by one major trend: the decentralization of certain activities from central to suburban and exurban locations.20 As suggested in our earlier analysis of the traded cluster activities in the Central Zone's smaller urban centres, small towns, and rural areas, manufacturing industries have led the way. These are typically larger operations in sectors such as automotive assembly and parts production, electronics, and metal manufacturing.

This phenomenon occurred in two distinct shifts. First, over the past three decades, industries in the GTA have moved from central employment zones to suburban greenfield locations (industrial parks and stand-alone, dispersed sites). A similar phenomenon has occurred within the Kitchener-Waterloo-Cambridge, Hamilton, and St. Catharines-Niagara CMAs. This process has also seen the partial suburbanization of financial services (particularly back-office functions such as mortgage processing, credit card departments, e-commerce, and telephone banking), as well as a decentralization of employment in activities such as retailing that serve local resident populations.

Second, there was a further wave of decentralization to greenfield sites in small towns and rural locations outside these urban regions. In most cases, the industries involved depend on trucking for shipping supplies and finished products - often on a just-in-time basis - and consequently located close to major highways in the Central Zone.

At least two other forces are driving this decentralization process, in addition to the increasingly widespread adoption of just-in-time production systems.21 First, firms in these industries have sought cheaper land on which to build sprawling, high-ceilinged, single-storey plants with multiple truck bays to facilitate frequent deliveries. Second, for land-intensive operations, the significantly lower industrial property tax rates in suburban and exurban locations have offered an additional economic advantage, helping to reduce firms' annual operating expenses in comparison to more central locations.

The companion trend to this selective decentralization has been a recentralization or reconcentration of the fast-growing knowledge-intensive sectors in the core urban areas of the Central Ontario region - notably the knowledge-intensive components of financial services, business, professional and scientific services, broadcasting, telecommunications services, arts, entertainment and recreation, design, and advertising. We describe the logic behind this increasing specialization and reconcentration below.

20. M.S. Gertler, A Region in Transition: The Changing Structure of Toronto's Regional Economy; ICF Consulting et al., Toronto Competes: An Assessment of Toronto's Global Competitiveness.
21. Berridge Lewinberg Greenberg Dark Gabor Ltd. and M.S. Gertler, Adapting to the New Realities: Industrial Land Outlook for Metropolitan Toronto, Durham, York, Halton, Peel, Hamilton-Wentworth and Waterloo, Report to the Industrial Land Strategy Study, Municipality of Metropolitan Toronto, 1995.