Will Hamilton’s Proposed 148%

Development Charge Increase Deter

Industrial Real Estate Development?

In mid-2023, the City of Hamilton revised its development charges and placed new rates into effect until June 2024. The new industrial rate stood at $16.70 per square foot—a 16.05% increase from the previous rate. Despite this increase, Hamilton’s rates remained reasonable, even low, when compared with other cities. To provide context, at that time, Oakville’s rate was $22.69, and Burlington’s was $22.37, while Toronto and Mississauga had much higher charges at $40.57 and $32.88, respectively.

It’s worth noting that year-over-year increases in development charges have become commonplace across the Greater Toronto Area (GTA). In 2023, Brantford experienced the largest spike at 23.26%, reaching $10.97—still relatively low compared to other cities. The graph below illustrates the development charges for various GTA cities from 2019 to 2023. Notably, Toronto and Vaughan consistently have the highest rates, but the general trend reveals steady annual increases and occasional decreases.

Presently, the City of Hamilton is reassessing its development charges for the remainder of 2024. The proposed plan suggests a staggering increase in industrial development charges to $41.48—a 148.38% surge from the current rate. The graph below breaks down the year-over-year changes in development charges across the cities mentioned above.

This unprecedented hike, if implemented, could adversely impact Hamilton’s industrial sector and the city’s long-term growth. Consider the implications for a developer constructing a 200,000 square foot building. The proposed increase would translate to an additional development charge cost of $4,956,000. Such a significant cost will divert development away from Hamilton, particularly when compared to more economical options, such as Brantford, where charges stand at $10.97. In this scenario, the savings in development charges alone exceed $6,000,000, making other cities in the GTA more attractive alternatives. This will make it more difficult for existing businesses to acquire space in Hamilton’s already supply constrained real estate market. In addition, it will be hard on the Hamilton labour pool as more developers and businesses leave the area due to cost and supply constraints. While these charges are not finalized, if Hamilton proceeds with such substantial increases, it raises concerns about the feasibility of development within the city and the future of this business-driven urban center.

Click here to find out more information on the proposal from the City of Hamilton.

If you have any inquiries regarding the information provided above or if you have specific real estate needs, please feel free to reach out to myself or any of our highly capable agents at Team Murray & Faldowski.

By: Philip Vargas, Data Analyst & Market Data Coordinator, Colliers Canad