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Squat concrete- block warehouses secured with razor-wire fences and steel-mesh windows stretch off into the morning light. Many appear deserted, with dust on windows and doorsills, garbage in the alley. In the doorway of one of several shabby houses, some dishevelled men gather to deal in drugs.

In an alley between a cheap hotel and a chicken processing plant, a trio of young artists paint canvases crafted in the lofts and ateliers of a converted sugar mill that looms over the street. A sodden-looking prostitute stands on a corner while a dozen immigrant women huddle nearby against the rain, waiting for a bus home from their sweatshop labour. On the main avenue, a relentless stream of cars roar past, carrying commuters from their downtown condominiums to suburban workplaces in office plazas, industrial parks and service malls far away.

This is Vancouver’s vibrant industrial future? Not even – it’s the current reality. And that’s a big problem.

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Enamoured with high-rise living and glossy downtown lifestyles – not to mention condo developers’ praise – Vancouver politicians and city planners have neglected the city’s industrial needs for years. The available supply of empty industrial land in the Greater Vancouver Regional District (GVRD) has dropped by almost 50 per cent in the last decade. With 600 hectares locked up in Vancouver alone, there are only 36 hectares of undeveloped land remaining in the city for industrial purposes. Some of that empty ground is on the southern city limits along the Fraser River, but most is east of False Creek on former railway land once slated for a high-tech city. Now in a state of limbo, the False Creek lands are filling in with city works yards, furniture stores, storage companies and possibly a big hospital. Another industrial zone around the Mount Pleasant neighbourhood is being infiltrated with office, retail and live-work spaces. In expectation of the city relinquishing Mount Pleasant’s industrial status, developers are aggressively assembling land and flipping property to create sites for future townhouses, which makes the area unaffordable for the small industries that are supposed to be there. And in Strathcona, the city’s original zone of industry, there’s less than half a hectare of vacant industrial land along Powell Street and little more than one around Clark Drive. That’s it.

Toby Barazzuol is not skeptical by nature.

Inside the well-painted concrete-block building at the foot of Heatley Avenue in the heart of the Strathcona industrial zone, right next door to a halfway house/hostel, he runs an exceptionally neat, although currently crowded, design and manufacturing plant for glass and ceramic corporate awards. He does well and shares his success. He gives his eight employees paid time off for community work and underwrites their non-car travel. He hires local residents with employment handicaps. He uses environmentally safe materials, recycles and devotes time to the Strathcona Business Improvement Association (BIA) as a vice-chairman.

Four years ago, Barazzuol was forced out of his Yaletown factory because the landlord sold the building to a condominium developer. Barazzuol purchased the flat-roofed 2,600-square-foot former crab processing plant on Heatley Avenue because it was close to his employees’ homes, his suppliers and his customers. It was also cheap. He quickly learned he had to install security on the doors and windows and accept car break-ins on the street. But Eclipse Awards International Inc. prospered, and for the last two years he’s been trying to expand.

“I wanted to do a second floor with a green roof on top, a bit of something progressive in this area to alleviate the depressed look of the place,” says Barazzuol. But the business owner discovered he’s in a section of the industrial zone that demands any expansion include 20-per-cent space for social housing. City regulations also demand so many additional parking spaces that he would have to surrender his ground floor entirely to vehicles. “We were told it would be a real fight with the city to get any changes.” Adjacent expansion is also out; prices for nearby industrial land have gone way up. “So we’re temporarily stuck, ‘intensifying our use of existing space,’ ” he jokes, echoing city-planner talk while he gestures at stock and shipments piled to the ceiling. “We’ll stay here for the time being.”

What depresses Barazzuol is that the exodus of small industries from Strathcona seemed to slow recently (he’s not sure why), and he’d hate to revive the outflow of businesses. But it is a struggle to stay. Industry, non-profit groups, government social agencies and residents’ associations are in constant battles over allowable uses for the properties. Much of Strathcona is a motley mix of decrepit homes – the average family income here is less than $20,000 – light industry and social services of some variety. City Hall, the BIA and the residents can’t even agree on the boundaries for defining their neighbourhood. Plus, Barazzuol can literally point to “the marginalized people, the crime, the social decay” at his doorstep. Across the street, three homeless people are assembling their rags under a bridge abutment, preparing to camp. One is already wrapped in a dirty sleeping bag on the damp, garbage-strewn ground, showing no signs of life. “The BIA spends half its time fending off expansion of social services agencies, which would only further concentrate their clientele here,” says Barazzuol. “But I recognize there’s NIMBY everywhere else in the city and nowhere for them to go.”

Besides social services, the only expansion happening in Strathcona is city-sanctioned conversions of old industrial buildings into artists’ spaces and other cultural uses. “Is Railtown [a block-long conversion taking place on nearby Railway Street] really any better than what happened in Yaletown?” asks Barazzuol. “I don’t think it’s the best strategy. It displaces industry.” There are at least 250 artists living in 80-plus studios in the Strathcona residential and industrial community, according to city statistics. Barazzuol briefly enthuses about his dream: to see his neighbourhood become a “green zone of environmental technology and practices. [Let’s] make it a showpiece and create jobs. There’s such blue-collar opportunity in that, to create vitality instead of depression.” But then he slows and adds, “That would require rezoning” and other city initiatives.

Big cities do not prosper by condos and office towers alone. A city must have room for blue collar and “new collar” work – the traditional services ranging from auto-body shops to printers to food processors – and the new era of clean light industry such as filmmaking, IT and biotech. The city must also have strategically clustered spaces for next-generation industries that will create employment and income for the ensuing half-century. And it needs all those places near the city core, with transportation routes to move goods, services and people quickly and cleanly. And there’s the bottom-line reality: without industrial growth, to whom will the city turn for tax revenue except homeowners, retailers and office tenants?

Vancouver’s prosperity is woefully uncertain. The city has no specific strategy to retain and recruit industry, yet its industrial lands are fast disappearing. According to the GVRD’s recent inventory, the available supply of empty industrial land in the entire region dropped by almost half in the last decade, from 4,600 hectares in 1996 to 2,800 hectares in 2005.

The lack of land was showing up in the rental rates of developed industrial property too. According to a late-2006 region-wide survey by CB Richard Ellis Ltd., available industry buildings for rent have fallen from 3.5 per cent to 1.7 per cent between 2003 and late 2006.

Prospective buyers face hostile environments, haphazard zoning and owners holding out for condo developers. Big cities like San Francisco have declared their industrial lands as sacred as parkland. Seattle offers tax cuts and red-carpet treatment to new industry. New York City buys up and leases out industrial land to sustain jobs. In contrast, by neglect, Vancouver may just become the West Coast’s first post-industrial city, one massive retail mall and branch-office plaza. But it will be much poorer for it.

Except for the traffic flow – 20,000 cars a day use Powell Street as a conduit to the city core – the bleak future is current reality for Vancouver’s bizarre East End industry zone called Strathcona. It’s the roughly 10-block-long swath of the city that stretches east from the notorious Downtown Eastside to Clark Drive and runs between the fenced-off port lands and the colourful wooden houses of the old Chinese-immigrant, low-income Strathcona residential neighbourhood. It is one of the few areas of the city that supports light manufacturing, distribution and repair businesses. It provides at least 8,000 jobs in at least 300 mostly small companies – about one-quarter of the manufacturing jobs in the city and half the warehouse shipping jobs. The vast majority of these firms have fewer than six employees. And the jobs are changing to non-industrial positions as manufacturers vacate the area and buildings are left to rot. Other structures have been transformed into low-rent offices for social agencies struggling to cope with the homeless overflowing from the Downtown Eastside.[pagebreak]Officially a protected zone for industry, the East Side Strathcona district is, in reality, the sclerotic heart of a once healthily diverse economy and multi-skilled Vancouver workforce. It’s now a tattered neighbourhood abused by decades of governments dumping all their social misfits into the nearby Downtown Eastside. As a result, the blue-collar industrial jobs are bleeding away.

The City of Vancouver is not alone in running out of empty land or appropriate and affordable buildings in suitable locations – the most obvious inducement for job-creating industries to expand or set up shop here. The entire Lower Mainland is slowly waking up to how little land it has left for industrial development. In the past decade, member municipalities of the region have lost 1,200 hectares of industrial-manufacturing land to development and rezoning for non-industrial purposes. According to GVRD studies, they’re currently losing at least 120 hectares a year. Theoretically, there are still 2,800 hectares in the region zoned by the municipalities as vacant industrial land, but half of that may be already occupied by housing or may have environmental or other constraints on it, say the GVRD experts. And much of it may be in the wrong place, far from communities, companies and transportation routes. More than 80 per cent of the remaining vacant industrial land lies south of the Fraser River.

All of this creates a challenge for Vancouver. “Industry” today means none of the smoke-belching, sprawling, noisy factories and services that once populated and polluted False Creek and Coal Harbour before surrendering to condo developers to meet the demand for waterside living in Vancouver. Today, industry means the service sector and job creators like computer systems design and new media, which are clean and quiet. It also means room for trucks and warehousing. And Vancouver, right now, has virtually no ­additional places for industry. The vacancy rate among existing factories and warehouses is below one per cent in Vancouver. And some of these structures, an entire block of empty buildings in Strathcona for example, are only being held for pre-condo demolition.

About six years ago, Vancouver finally acknowledged the social and physical chaos of the Downtown Eastside, and now federal, provincial and municipal funds are filtering into that community, including money for something grandly called economic revitalization. Two years ago, the city planners and politicians rudely awoke to the condo-driven disappearance of office space and white-collar jobs in the downtown peninsula and launched a $1.1-million study of the situation. The study will also give some thought to industrial lands, say the city planners. And last year, the city’s rarely consulted economic development council promised to draft an economic development strategy, due by 2008.

But will any of the studies and talk reach the grimy streets and beleaguered businesses of the Strathcona industrial zone? And will it arrive in time to avert a post-industrial future?

Barazzuol has heard almost nothing about the benefits of the multi-government Downtown Eastside Revitalization strategy, although Strathcona is supposed to be part of it. The city has also refused to assign a specific planner to the Strathcona area to deal with local issues and will not allow development to displace a single residential unit in Strathcona, a promise made to homelessness/poverty activists. “So nobody has created any sort of vision for here. Things happen without any overall plan,” says Barazzuol. “No one’s going to invest, fix up or relocate to down here. There are people holding out rather than renovating their buildings, just waiting for the city to rezone the industrial areas.”

Two blocks away, the president of one of the biggest, longest-established and most secure industries in the Strathcona zone says he, too, fears there’s nowhere for him to grow but elsewhere. Peter Joe’s well-maintained Sunrise Soya Foods factory on Powell Street recently absorbed an adjacent 12,000-square-foot warehouse, to be used for shipping purposes. But that’s probably the end of it in Strathcona for this venerable family firm, now the fifth-largest soy products producer on the continent, employing 200 people, many of them locals.

“I would say we cannot expand here again, for lots of reasons,” he says somberly. He doubts he can find affordable land, including room for huge trucks, and he questions whether the renovation of nearby old buildings is realistic. “Plus, there’s the element of the social problem, the crime and the socially disadvantaged people here,” he adds. Companies, their employees and their clients don’t want to walk through neighbourhoods with people lurking in doorways, sleeping in gutters or emerging from dumpsters. “Too many people prefer to work elsewhere.”

Joe says he’s perplexed by the shifting currents in the Strathcona zone. He sees more vacant warehouses and rarely used buildings. “There are a lot of buildings here I wonder about. We certainly haven’t seen much development or redevelopment.” The most surprising development is the influx of big public storage companies on the sites of old warehouses and factories, including one within sight of his office. “Even the real-estate companies I talk to are amazed” by these new facilities so clearly aimed at cramped condo-dwellers’ needs, he says. Storage companies create minimal value-added economic activity but they qualify as industries under the city’s outdated 1995 definition.

Joe is not sure what the next-generation industrial zone should look like, but the city and the business community should be doing more to determine that now, he says. It is essential to maintain a vibrant economy and diverse work environment for city residents. But Joe won’t be part of it. Large firms such as his are going to the suburbs. “We’re not going now, but our next expansion will probably be somewhere else,” he confides. He just doesn’t know where.

“Industrial land in the city? There isn’t any,” confirms realtor Bob Laurie. And elsewhere in the region, “it’s eroding, it’s getting displaced. There are so few choices in the city you can hold them in one hand.” Co-chair of the Vancouver Board of Trade’s local governance committee and a VP of CB Richard Ellis, Laurie fears the city has run out of room for mistakes regarding land use. “Vancouver is moving away from its comfort zone. We’ve gotten preoccupied with living space and we’re going to become the retirement community by the bay. [Former chief city planner] Larry Beasley made his whole career building everything possible west of Main Street.” The socially handicapped and homeless in the Downtown Eastside are a critical concern now for Vancouver. “Why does the city not focus on jobs and industry too? Industrial land is the DNA of a job market,” Laurie observes.

Next door to a poultry processing plant and upstairs past a steel gate and buzzer system, in the spartan offices of the Strathcona BIA, Cathy Kwan says no one can say how fast the industrial zone is ­de-industrializing. As executive director of the second-largest BIA in the city, and one of only two dominated by industry, she knows the 850-member roster is holding steady. But that’s hardly a good sign in an ostensibly booming economy. The association’s 2003-2005 survey shows a slippage of members in manufacturing and a rise in services. The BIA can’t afford to do detailed studies because it’s preoccupied with “keeping our existing industry and creating a comfortable environment.” The association, funded by its membership, spends half its entire $450,000 budget on security guards to patrol the community. In 2005, the rent-a-cops patrolled for 6,000 hours. The BIA also ­funded 1,400 hours of street washing and hundreds of additional hours of graffiti removal. It also regularly supports festivals and street ­beautification.

“Our members’ first concern is security. Being so close to the Downtown Eastside is a really big concern,” says Kwan. The BIA lobbies City Hall on everything from better bus service for companies loath to leave night-shift employees lingering on the streets to lifting a ban on vehicles stopping in front of one of the busiest big factories, Larrivée Guitars. The BIA does not consider city hall sensitive to the industrial aspects of Strathcona.

“The city planning department? They don’t do economic development,” says Kwan, resignedly. Plus there’s the property tax issue. Business pays 52 per cent of all the property tax in Vancouver, although it holds only 16 per cent of the assessed property value. Vancouver has the highest business property tax rate in Canada, twice as high as neighbouring municipalities. And finally, despite all the talk in city council, the multi-government agreement on a Downtown Eastside Revitalization plan hasn’t reached the industrial zone yet, says Kwan.

It won’t, in any significant way, for a long time. Launched in 2000 and renewed last year to 2010, the Vancouver agreement promises $25 million for a 20-page list of initiatives, most of them studies and experiments in improved social services and housing. The city is also offering $100 million for heritage-building preservation plus property-tax, parking and density bonuses for developers in the Downtown Eastside. There’s a modest $600,000 earmarked for economic revitalization, a curious definition for such things as a $300,000 street-beautification walkway linking Gastown and Chinatown and a $200,000 renovation of the basement of the old bank building at the corner of Hastings Street and Main Street – an intersection known as Ground Zero for its display of human ­devastation. Inside those renovated basement offices, Mike Carter says that it will indeed take a while for economic revitalization to be felt in Strathcona’s industrial zone.

Carter, a provincial bureaucrat, is CEO of Building Opportunities with Business (BOB), an amalgamation of previous provincial job-creation projects infused with another $2 million from corporate citizens such as Bell Canada, G&F Financial Group, Vancity Capital Corp. and the federal agency Western Economic Diversification Canada. The money is meant to promote business development and employment training around Ground Zero. BOB has recruited 80 city firms who have agreed to give preference to eastside suppliers of services and labour. BOB has found employment for 3,000 local residents with barriers to permanent full-time work. It provided eastside workers and suppliers for the Olympic Village construction site, for example, and foresees tourism and services as future job generators.

“But we haven’t taken on industrial development. Our job is jobs, training and procurement,” says Carter. “Attracting industry to the industry zone? We’re a couple of years from thinking about that.” And when will all the Downtown Eastside projects change life on the streets of Strathcona’s industrial zone? “It’s not going to happen overnight. It’ll be five years.”[pagebreak]Five kilometres away at Vancouver City Hall, senior city planner Nathan Edelson insists there’s thinking going on and there’s planning happening. Admittedly, the positive benefits for Strathcona from the Downtown Eastside revitalization could take a decade. But the city will absolutely not abandon the industrial zone in the meantime, insists Edelson. It just doesn’t know what to do with it.

Edelson chairs the Vancouver Agreement Economic Task Team and has been working in the downtown core for a decade. He says things aren’t quite as bleak now as they were in 2002, when a study found that the economic capacity of the Downtown Eastside, including Strathcona’s industrial zone, was crippled and declining. Today, the death rates due to drugs and alcohol, AIDS and suicide are “no longer at epidemic levels.” There’s some redevelopment, such as the Woodwards building work, and some low-income ­housing is underway – a few hundred units, though several thousand are needed. The BOB program is up and running. However, “the number-one priority [of economic revitalization] is supportive ­housing. That’s the priority.”

The city is conducting yet another study involving an industrial head count in parts of Strathcona and some blue-sky strategizing on how to double the industrial usage of the zone. Edelson envisions high-rise factories with offices on the upper floors. Admittedly, it will take a couple more years to be more specific and several more years to see concrete results. Of course, that would require co-operative investors, industries, residents and city council initiatives. Industrial development “is not our expertise,” admits Edelson. “But city planners are naturally curious people. And we’ve got the zoning power.”

Nearby, in the quiet little offices of Vancouver city councillors, Peter Ladner ponders what the city could do with such power. Ladner is the Non-Partisan Association councillor who, in 2003, penned a lyric proclamation that industrial lands “function as the storeroom, refrigerator and repair room for the downtown and therefore advance sustainability principles by minimizing transportation.” Uncertainty about industrial lands “will lead to ­instability of the land base and an exodus of jobs from the city, and therefore be it resolved that Council confirm its unequivocal ­support [for economic development],” declared Ladner. Last year, he led the council’s endorsement of some innocuous “guiding principles” for Vancouver’s economic development, such as being ­competitive, attracting clusters of world-class industries and ­providing infrastructure. But specifically how, when and where? Ladner retreats; he’s “not so sure” the city should get too involved in industrial development in places like Strathcona. “As the mayor says, the city’s job is to level the playing field, cut red tape, get out of the way and not pick winners or offer incentives” to particular neighbourhoods or economic sectors. “We haven’t so far ever said we want to pump up one sector.”

What Vancouver city council says and what it does can be two very different things. Vancouver has poured staff and money into servicing the film industry. It ramped up the downtown condo industry. It offers multimillion-dollar subsidies and tax holidays to heritage-site developers in Gastown, as Ladner acknowledges. It even sacrificed industrial land to make way for the 2010 Olympic Village. But in general, beyond ensuring the land remains zoned for industry and delivering parking, policing and sewers, Ladner doubts such ­industrial zones as Strathcona merit extra city attention. “What Strathcona wants is to be safe and clean.”

Ladner is council’s designated liaison to the Strathcona BIA. So what does he think is an appropriate role for the city? “In some ways, we’ve got to let the market laws play themselves out,” says Ladner. He also acknowledges that other cities, especially prime economic competitors like Seattle, Portland and San Francisco “are far more proactive” about inducing industrial growth with tax grants, funding and other incentives. So does Vancouver’s approach amount to benign neglect? “I’m not sure I’d call it that,” says Ladner.

That is precisely what Melinda Entwistle calls it. “Oh, indeed Strathcona has suffered from a kind of benign neglect,” as have all industrial zones in the city, says Entwistle, former CEO of the Vancouver Economic Development Commission (VEDC). The city is losing industries now, she says, although nobody’s tracking how many. Once a full department at City Hall, the VEDC was downgraded and contracted out to a citizen-directed board with a modest city subsidy a decade ago. With a bare handful of largely new staff, the VEDC has done occasional studies and modest promotion of Vancouver abroad. It’s doing another study now.

Vancouver is unusual among big cities in that it is the major centre for business and job creation within the region, accounting for 28 per cent of the regional population, 35 per cent of the jobs and 36 per cent of the businesses, but has no strategy for sustaining its prosperity, says the VEDC. It has no vision for future opportunities and no coordination of efforts between governments and industry. And it has been traditionally inattentive to its industrial zones, perhaps always assuming more would emerge despite benign neglect, says Entwistle, a former BC Hydro executive.

Entwistle’s agency, ensconced in blond wood and glass-partitioned offices on the 16th floor of a West Georgia Street tower far from Strathcona, is now doing a major investigation of the business climate to figure out what specific global-scale industrial niches Vancouver could fill, how and where.The three-year study – city council has so far only funded one year – may not lead to industrial incentives comparable to Seattle or Portland, says Entwistle. So how do we compete? “With other advantages.” What are they? “We don’t know. We have to identify them.”

In the meantime, until all the studying and identifying and planning is translated into markedly different council policies, business-community engagement and actual development, Vancouver will likely continue to lose traditional blue-collar, new-collar and next-generation industries and jobs. Until the Downtown Eastside becomes a different place, small industries like Eclipse Awards and larger ones like Sunrise Soya may pack up and move to the suburbs. And certainly some firms will simply stay away.

Entwistle cites a very large new-media firm, not unlike Electronic Arts Inc., that seriously considered putting a 500-employee factory in Vancouver six months ago. The firm, which she won’t identify, ultimately eliminated Vancouver because it didn’t like what it could see, or rather couldn’t see: ­industrial land and other incentives.

Article photos: Jennifer HoughtonPhoto of Ross Howard: Dave Thomson Photography and Design/The Jack Webster Foundation

Related story: The Lost City - Slideshow

 

Ross Howard with his Jack Webster awardRoss Howard

We are proud to note that this story has won the 2007 Jack Webster award in the Industry & Economics category. Congratulations to Ross Howard on this award. You can find a full list of award winners here.

Jack Webster FoundationAs Western Canada's best-known and most influential reporter, Jack Webster left his mark on the BC journalism scene with his hard-hitting reporting style. In his more than 40 years of print, radio and television journalism, Jack Webster was synonymous with insightful, accurate and unabashed reporting.

Founded in 1986, The Jack Webster Foundation carries on Jack's legacy by promoting and recognizing the achievements of BC based reporters with the Jack Webster Awards.