Residential and Business Opportunity Study Township of Warwick ________________________ SUBMITTED: Watson & Associates Economists Ltd. 905-272-3600 January 17, 2019 [email protected] Table of Contents Page 1. Introduction ........................................................................................ 1 1.1 Terms of Reference ................................................................................... 1 1.2 Context ...................................................................................................... 2 2. Macro-Economic Trends Influencing Residential and Non- Residential Development ................................................................... 3 2.1 Provincial Context ...................................................................................... 3 2.2 Ontario’s Shifting Economic Structure ....................................................... 5 3. Warwick Demographic, Economic and Socio-economic Profile ......... 9 3.1 Population Trends ...................................................................................... 9 3.2 Demographic Trends ............................................................................... 11 3.3 Labour Force and Commuting Trends ..................................................... 13 3.4 Household Income ................................................................................... 14 3.5 Employment Growth Trends and Industry Clusters ................................. 15 3.6 Recent Development Activity and Trends ................................................ 20 4. Residential Market Analysis ............................................................. 22 4.1 Regional Housing Market ......................................................................... 22 4.2 Local Housing Market .............................................................................. 26 4.3 Market Opportunities for Residential Development .................................. 29 4.3.1 Market Opportunities for London Commuter Market ..................... 31 4.3.2 Market Opportunities for 55+ Population ....................................... 32 Watson & Associates Economists Ltd. \\FILESERVER\Hdrive\Warwick\2018 Residential and Business Opportunity study\Report\Warwick Residential and Business Opportunity Study.docx Table of Contents (Cont’d) Page 4.3.3 Observations ................................................................................. 33 5. Retail Commercial Market Analysis ................................................. 34 5.1 Retail Market Profile................................................................................. 34 5.1.1 Estimated Trade Area ................................................................... 34 5.1.2 Watford Retail Base ...................................................................... 37 5.1.3 Retail and Commercial Service Characteristics of Similar Small Retail Markets ..................................................................... 41 5.1.4 Retail and Commercial Service Highway Uses ............................. 45 5.1.5 Customer Survey Results ............................................................. 47 6. Township of Warwick Industrial Profile and Competitive Position .... 48 6.1 Regional Employment Profile ................................................................... 49 6.2 Regional Industrial Market ....................................................................... 51 6.2.1 Cost of Development Parameters for Industrial Lands Development ................................................................................. 53 6.3 Profile of Warwick Industrial Market ......................................................... 55 6.4 Target Sector Opportunities ..................................................................... 57 7. Market Assessment and SWOC Analysis ........................................ 60 8. Strategic Recommendations ............................................................ 64 Watson & Associates Economists Ltd. \\FILESERVER\Hdrive\Warwick\2018 Residential and Business Opportunity study\Report\Warwick Residential and Business Opportunity Study.docx 1. Introduction 1.1 Terms of Reference Watson & Associates Economists Ltd. (Watson) was retained by the Township of Warwick to undertake a Residential and Business Opportunity Study. The study came about as an outcome of the Township’s recent Strategic Plan 2015-2020, based on direction from Township Council. There is a sense that the Township is underserved with respect to commercial (retail and services), as well as industrial businesses. There has also been limited residential development in the community and there is a recognized need to assess market potential for new housing by market segment. The Residential and Business Opportunities study provides an economic and market assessment of the Township with respect to marketability and the potential for residential and non-residential development, and identifies potential measures to improve municipal competitive positioning to capitalize on the market opportunities identified. The project has a number of key tasks, as follows: • Develop a clear understanding of the existing demographic and economic structure and recent development/growth trends within the Township; • Provide an economic and market assessment of the Township with respect to marketability and the potential for residential and non-residential development; and • Identify potential measures to improve municipal competitive positioning to capitalize on market opportunities identified. This study will serve as a guiding document to develop marketing and economic development initiatives to attract investment in the Township. Watson & Associates Economists Ltd. PAGE 1 Warwick Residential and Business Opportunity Study 1.2 Context The Township of Warwick is located in southwestern Ontario along the Highway 402 corridor, approximately 60 km west of the City of London and 45 km east of the City of Sarnia, as illustrated in Figure 1. The Township is situated on the eastern side of Lambton County and borders Middlesex County to the east. Figure 1 Location Map The Township has a population of approximately 3,7001 and covers a land area of 290 sq.km comprised of a diverse range of communities including the Urban Centre of Watford, as well as the Rural Settlement of Warwick. The Township has a significant 1 2016 Statistics Canada Census. Watson & Associates Economists Ltd. PAGE 2 Warwick Residential and Business Opportunity Study rural component with a well-established and vibrant agricultural sector. The community is served by a number of highways including Highway 402, Highway 79 and Highway 22. The Township is also served by the main CN rail line linking London to Sarnia. As with many small and rural municipalities across Ontario, Warwick faces a number of demographic and economic challenges. The community has had limited population and employment growth over the past decade, combined with an aging population. To ensure long-term economic and fiscal sustainability, there is an increasing need for small to mid-sized communities such as Warwick to optimize opportunities to accommodate growth as well as strengthen industry and labour force attraction and retention. 2. Macro-Economic Trends Influencing Residential and Non-Residential Development The following provides an overview of recent macro-economic trends which are anticipated to influence future growth trends on residential and non-residential lands within the Township of Warwick and the broader regional market over the coming decades. In many respects, Warwick’s long-term economic growth potential is largely tied to the success of southwestern Ontario as a whole, and more specifically, Lambton and Middlesex Counties. As such, this chapter, includes an analysis of the regional growth prospects in the regional market. 2.1 Provincial Context The Ontario economy is facing significant structural changes. Over the past several decades, the provincial economic base, as measured by G.D.P. (gross domestic product) output, has shifted from the goods-producing sector (i.e. manufacturing and primary resources) to the services-producing sector. Much of this shift has occurred during the past decade, driven by G.D.P. declines in the manufacturing sector which were most significant immediately following the 2008/2009 global economic downturn. In contrast, service-based sectors such as financial and business services have seen significant increases over the period. Watson & Associates Economists Ltd. PAGE 3 Warwick Residential and Business Opportunity Study Over the past decade, the Ontario economy has experienced a steady rebound in economic activity since the 2008/2009 downturn; however, this recovery has been relatively slow to materialize. That said, provincial G.D.P. levels have sharply rebounded since 2014 and are forecast to remain above the national average in 2018/2019, as illustrated in Figure 2. This economic rebound has been partially driven by a gradual recovery in the manufacturing sector which has been fueled by a lower- valued Canadian dollar and the gradual strengthening of the U.S. economy.1 Looking forward, provincial G.D.P. growth is anticipated to ease from just over 2% in 2018 to approximately 1.3% by 2020, largely as a result of a tightening labour market and slowing global economic growth.2 While the performance of the Ontario economy is anticipated to remain positive over the near term, there are potential risks to the national and provincial