The Secret to Unlocking Toronto's Potential with Jon Ramscar

Canada’s productivity crisis is catching up to us. Giles Gherson and Jon Ramscar, CEO of CBRE Canada, unpack why the Toronto region is falling behind and what it will take to turn things around. From unlocking employment lands to cutting red tape, discover actionable solutions to boost economic growth and reclaim our competitive edge.

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From the Toronto Region Board of Trade, this is Toronto Talks. Toronto, let's talk productivity. From bad to worse, that's how a new report from TD Economics is describing the state of Canada's productivity. We know productivity is a problem in Canada. We're now 30% less productive than the US. We have been very good at growing our economy by adding workers. We've been much less successful at increasing output per worker. And this is catching up to us. Productivity can be defined in so many ways. But at the board, we focus on GDP per worker, the value each worker contributes to the economy. Compared to the United States, workers in the Toronto region face a significant gap, with American workers contributing an additional $99,000 per year. Alarmingly, this disparity continues to grow. To address this, the board is uniting business leaders to drive meaningful change. Visionary CEOs have joined the Business Council of Toronto, dedicated to innovative solutions for upskilling the workforce, investing in technology, and improving the regulatory environment. Our President and CEO Giles Gerson recently sat down with John Ramsgar, President and CEO of CBRE Limited in Canada. John is also a founding member of the Business Council of Toronto. They sat down to talk about the challenges ahead and the path forward. Here's their conversation. John, great to have you here. Great to have you at the Toronto Regional Board of Trade down here on the waterfront. Just to start off with, tell us a little bit about who you are. And I know you came from the UK a number of years ago, landed in Vancouver. Tell me a bit about that journey. Absolutely, Giles. And first of all, it's a pleasure to be here. But you're right, this is a real English accent. And I moved here now about 14 years ago. But I started off my real estate career in the UK market in London, where I was there for several years. And then made a move to come to Canada because I grew up traveling here when I was younger and fell in love with the country. First and foremost, it was a passion to want to be in Canada, the opportunities that are afforded here, a great way of life. You work hard, you can do well. And I fell in love with a Canadian dream and left my career in London, much to the dismay of my parents at the time. I'm sure. And came out to Vancouver with skis and snowboards and suits. Everything you needed in Vancouver. everything I needed and planned for a couple of months off to enjoy the experience before re-engaging and career. And within two weeks I was working at CBRE in that market and discovered this world of brokerage and my background is more on the investment side of commercial real estate. I've been very fortunate with the experience I had in Europe and then I got a great exposure with CBRE in Vancouver and it was kind of the pre-eminent leaders in the country for transacting in commercial real estate and got exposed to a lot of clients and the market and was able to bring some, you know, a bit of a UK lens to the business and it's been an incredible journey. But I really, when I think back to that time, I really learned entrepreneurialism in Canada. That's interesting. And it was so exciting because you could just make things happen, which wasn't the kind of wasn't typical from where I grew up in the UK market, which is a lot more regulated. You mean sort of attitudinally or culturally or actually more regulatory constraints? Actually, yeah, actually. And I just saw this growth run that was going on in Canada. You know, coming out of the GFC, we weren't as affected in this country. And so I had a great kind of almost 10 years in the Vancouver market in that experience. And then CBR encouraged me to take on a leadership role to manage the Toronto business. here, which I didn't think was a path, if I'm honest, that I was going to go down originally being an investment professional, but they saw the leader in me. And I followed that gut to move my family out to Toronto. And here I am five years later, and two years ago, I transitioned to be the president and CEO of the organization. And it's a big outfit, and there's lots on your plate. But maybe give us a little bit of a flavor of what's on your plate. I mean, what is the day in the life of the president and CEO of CBO? You are everything and everything to everyone. But all the deals, you have to, you know. Yeah, it's a large organization. You know, we're kind of split two key areas from our advisory business. And we call it GWS, Global Workplace Solutions, and FM. But the company in total is over 3,000 people in the Canadian market, 23 offices. We're in every aspect, really, of commercial real estate. And we're continuing to diversify the business right now. But day to day, we have a lot of field agents in the market that are transacting and leasing real time. And it's that real time information, I think, that differentiates us. Just because of the scale of it. Because of the scale, yeah. Because the network is so deep across the country, we can have a huge positive influence on the country from our perspective. At the board, as you know, we've been really focused on the state of the economy. we've been looking at what we call GDP per capita. So it's really sort of almost the prosperity of the region. You've joined our Business Council of Toronto, which we're thrilled to have you. You were a founding member of it. So this is a group of CEOs, a prominent CEOs. We jumped on it. You jumped on it, which was great. But early, and this is, of course, we have now about 17 senior CEOs from the region who really want to lean in and be active in turning around our productivity problem. But with a CBRE perspective, What do you see as the biggest opportunities and challenges in the GTA market? Yeah, I'm going to go back before I answer that question because I'd say we're very happy to get involved in this initiative, Giles. As you know, we're excited to get involved because it's very much aligned with our objectives as a company. So when we look at the future of CBRE right now for Canada, we see us now coming out of the pandemic and we're looking at the next 10 years of the company. And we've got aspirations to be a world-class organisation, we're continuing to diversify, but we also know how much influence we can have, positive influence right now in the community. And if you look at the commercial real estate sector on its own, we've had a gravy run for 20 years driven by low interest rates, and that's not going to be the case going forward. We're in a low-growth environment, there's a bit of complacency there, we need some reinvestment, And a lot of that driving that growth has been immigration, which covers a lot. It's a bit of a band-aid. It's a catch-all, yeah. It's a catch-all, but now we're starting to see what's underneath or the lack thereof, which we have to deal with. And so for us as an organization, it aligns with our objective because we are trying to help facilitate more growth. We're a growth organization, and I get great purview in this role, and it's sitting with our U.S. leadership and as part of a global platform, as to the opportunities and challenges that we face that are unique in Canada. And I'd say, you know, from my perspective, and I have a slightly different lens, as you know, growing up in the UK, but we have a huge opportunity for growth in Canada. And if I'm honest, I find it frustrating because... We're not taking advantage of it, perhaps. We're not taking advantage of it. And we've got a lot of untapped potential. Toronto is not just a major Canadian city. It's a world city. And we've got to think big in that regard. and we should be facilitating the growth of these organisations, whether it's an industrial office users that want to be in this market because we've got some of the best talent in the world. But despite that, some people are turning around or not coming through because it's too difficult to do business in this environment. And I think we've got to change that culture and shift that. We're in a productivity crisis, as you well know, and dead last, to steal your words, is not an option. Dead last is dead wrong, we say. And so we've got a lot of work to do here. But again, I don't think, you know, when I look at the GTA West, you know, that area, that region is a quarter of Canada's GDP. Right. Two-thirds of Ontario. We get that right, that's going to turn around the country. The rest of the region. Yes. And when I look at that, it's, you know, there's a lot of what's the unified vision? What's the framework? We're very fragmented right now. And so I look at that almost like we look at, you know, ourselves as an organization. how do you streamline, how do you make growth more effective as we go forward? And I think there's some really, there are a lot of quick wins there if we can work together more cohesively, both public sector and private sector. And then what you're talking about really in the GTA West Gateway is, as you say, these four municipalities that, you know, they're right up next to each other. They straddle this important space, but they don't coordinate. They don't talk to each other. Whether it's transit and getting employees from maybe Scarborough to that area. And there are lots of employees who cross the city to go there, and the transit system doesn't work for them. And the transportation is, at least on the roads, is quite difficult with all the bottlenecks and congestion. And then you've got the employment lands that appear to be shrinking, so the opportunities are getting less. And then housing, of course, is in dire shortage. So I think what we really want to do is see if we can get a plan, as you say, help come up with a plan, and really coordinate with the four municipalities so that we have a regional perspective on, particularly on land use, for example. That's right. And if you look, there are solutions. The good news is there are solutions out there, Jars, which I think we'd see those wins probably quicker than we'd realize. But if you look at around the world and major jurisdictions and regional planning, a lot of it is around the airport and what that facilitates in terms of infrastructure growth. Right. Well, it's a hub, obviously. as a major hub and I think we need to be looking at things that are a little bit bigger than just the municipality level in this region to drive effective growth. But today at our conference Race for Space that I talked about at the beginning, you provided some pretty stark numbers in terms of a couple of things. One, the cost of land here which is rising quite rapidly compared to neighboring, for example, US states which is the competitor market, the cost of just building, construction costs are high, and then you've got development charges on top of that, which are strikingly out of whack with what you see in New Jersey, say, or in other U.S. states. All of that, you know, piling on the costs, and then delays, huge delays in the permitting and approval process, I think up to two years now to get a project approved, which is way out of sync with the U.S., and so again, I think we run the risk, I sense we do, of not making good on all the opportunities that we have here. We're right there now. We're at that point in the marketplace. If you talk to our field agents, they'll tell you that today. And we've always been notoriously difficult as an operating environment, particularly on the industrial side with occupiers and growth, but we were cheap. Now we've gone from difficult and cheap to difficult and expensive. That's a bad combo. It is a bad combo. And you'll hear the feedback from a lot of occupiers right now. It's strategic for them to be in the Toronto industrial markets, the fourth largest in North America. But the perspective is starting to change that we're not here because we're choosing to be here. We're here because we have to be here. Yeah, one of the things I worry about, because I'm a former Deputy Minister of Economic Development in the province, as you know, for quite a long time. And the thing that worried me a lot was that you talked about complacency, a bit of complacency about the opportunity south of the border. And we sometimes forget that we're right next to this giant, massive market. But it's easier to be inside that market than outside that market. We have to make it more palatable to be here so that you enter that U.S. market from here. So we look at all the industrial jobs that we've had and we still have, but they have to be competitive with what's available on the other side of the border. Are people going to go there? And I've seen a steady stream of companies growing in the U.S. as opposed to growing here in the GTA. Companies that wanted to grow in the GTA, but because of the costs, because of the delays, they haven't. That's right. And Giles, we're on the back foot right now, and we've got to get on the front foot, And it's not looking any more promising with the Trump effect that's likely to come our way. But it's going to exacerbate the challenges we have. But if you look at our competitive set, we are twice as expensive and it takes us twice as long to develop. And so that is not sustainable. And, you know, again, it's not like these are a challenging fix. But, you know, we need to get on with the solutions fairly quickly. It's so ironic because, I mean, you think of Ontario as a very high growth province population and area in North America. And we really did well, if you go back to the last century, because we were low cost. We had lots of land. That's right. And we had very low energy costs as well. And we've changed a little bit over the years. And we have to get back to that, I think, being a competitive market. I think that's what you're saying. John, looking forward to working with you on the Business Council of Toronto, particularly the GTA West Gateway. I think that's going to be a huge opportunity to work with the municipalities as a microcosm of the entire GTA and see if we can't move the dial on this, particularly the land availability, land cost, and the delays in processing projects. And on transit, of course, which is getting people to those workplaces and home again and employment lands, opening up those employment lands. I mean, then we'll be back in the mix, I think, in North America. So I'm looking forward to that. Just the last question. You're so busy during the day. I know you've got a young family, a young family. But do you get any time for relaxation? You probably haven't got your snowboard out as much as you did in Vancouver. The plan backfired to be able to get out of here. Are you at least reading some good books? What's up? Yeah, no, I'm spending time with families. Obviously, I thoroughly enjoy. I have two young daughters slash monsters, I call them, a highly active age at 9-11 with a ton of activities. Just you wait. No downtime, but I won't wish it any other way. I'm an avid outdoorsman, hence I love being in Canada and what a great outdoors we have. But for reading, I do read a lot, because I think when you're running an organization, and it's back to this conversation, is making sure you're keeping an objective perspective on things. It's very easy to fall into, as we say at CBRE, groupthink. And you've got to challenge that. And certainly with where Canada has been and where we think we're going, we're having to adapt to change right now into a low growth environment and we've got to find ways to adapt and find new areas of growth and so I get a lot of perspective from reading but you know one book I'm reading right now which I've read this actually several times is Clive Woodward it's called Winning who was famous for being the coach of taking England rugby to win the World Cup and he had to take a team that had underperformed consistently through history and adapt them through change and he puts a lot to that to a concept called teamship, which is really engaging major stakeholders in the team to further reinforce the values and the strategy and the plan. So it takes a village, basically. That's right. And so you can't do it alone in short, and it's, again, back to a key stakeholder engagement. But having a plan is a good starting point. Well, I know that's your mantra, so we'll look forward to working with you on that. John, thank you very much. It's been great to have a chat with you and look forward to working with you. Thanks, Giles. Thanks. Find out more about Canada's productivity gap and the Business Council of Toronto by visiting our website. It's easy to remember, bot.com. And thanks for listening to Toronto Talks. Make sure you subscribe on Apple Podcasts, Spotify, or wherever you listen. And don't forget to keep talking Toronto. Our voice drives meaningful change.