Canada's Best Cities: The Winner St. John's

Flush with oil money, the Newfoundland city is now enjoying an economic revival.

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Stroll down the historic streets of St. John's these days, and you'll readily find evidence of the city's booming economy. On a late-summer afternoon, the view from the foot of Water Street — North America's oldest commercial road — includes three enormous offshore supply vessels jostling for space at the edge of the harbour, bobbing imposingly on the ocean's waves while preparing to make the long journey back out to one of three oil platforms operating off the coast of Newfoundland. Docked slightly farther along the shoreline, spilling its 655 passengers into the compact downtown core, sits the enormous Saga Ruby cruise ship, en route to the Caribbean from Dover, England. Just past the cruise ship terminal, on Pier 7, diners relax on the oceanfront patio of the sparkly new Keg Steakhouse. The upscale eatery does a brisk business; 10 months ago, it recorded the highest opening-week sales of any Keg franchise ever.

St. John's today is a far cry from the depressed city of the early 1990s, when Newfoundland was decimated by the collapse of the cod fishery and the provincial capital's unemployment rate soared to more than 20%. “Things were pretty desperate then,” says Mayor Andy Wells, who was deputy mayor at the time. In fact, between 1993 and 1998, the city's population actually decreased by some 4,000, as Newfoundlanders fled the province in search of work elsewhere.

Transformed by the influx of oil money over the past decade, St. John's is now enjoying an economic revival, shedding its fishing village image in favour of boutique hotels, chi-chi restaurants and trendy clothing outlets. “Oil is driving the economy,” says Wells, “and there is a real sense of optimism.” People are now flocking there. In 2004, the population of the greater metropolitan area increased for the sixth consecutive year, reaching a record level of 179,932.

Even with its new-found riches, St. John's remains a bargain for businesses looking to set up shop. Operating costs are among the lowest in Canada, and, of the 40 cities examined in the Canadian Business survey, only Sherbrooke, Que., boasts lower living costs. What's more, the city's laid-back attitude and small-town charm make for a loyal, dedicated workforce. Newfoundlanders, famous for their strong ties to the province but traditionally frustrated in their attempts to find fulfilling work at home, are increasingly staying put. “Ideally, I'd like to stay in St. John's,” says Anna Brophy, an MBA student at Memorial University of Newfoundland. Toronto-based communications consultant Dawn Barnable, who grew up between Fermeuse, Nfld., and St. John's, admits “it would be nice to have the option” of going home.

The most influential jobs in St. John's right now are connected to the oil industry, the business responsible for the city's turnaround. Oil was first discovered off the East Coast way back in 1979, and by 1997 the Hibernia project — located 315 kilometres southeast of St. John's and jointly owned by Exxon Mobil Canada, Chevron Canada Resources, Petro-Canada and others — was pulling light crude from the ocean's floor.

Since then, the Terra Nova and White Rose projects have started up and should boost Newfoundland's output to approximately 462,000 barrels per day by the end of this year, about 20% of Canada's oil production. More importantly, the platforms provide local employment. According to a study conducted by the St. John's economic development office, the oil-and-gas industry has already pumped $800 million directly into the city's economy, and employed between 5,000 and 6,000 people. Recent federal-provincial agreements, brokered by Newfoundland's adored premier, Danny Williams, ensure that so long as oil-and-gas exploration continues, billions more will flow into local coffers, key to ridding the province of its crushing $12-billion debt.

But oil isn't the only game in town. Islanders who mourned the loss of the fisheries, an integral part of Newfoundland's heritage for more than 400 years, quickly realized they would have to explore several new methods of making money if they wanted to survive. What many discovered was that the Rock's natural beauty and unique culture easily lend themselves to the growth of a substantial tourism industry, especially if enterprising Newfoundlanders take advantage of their ancestral link to the Irish and tap into the lucrative British travel market.

Families that fished for generations have set up shop as tour guides, taking landlubbers out to sea on old fishing boats to view whales, puffins and icebergs. New cultural attractions in St. John's, such as the Rooms, the architecturally impressive museum/art gallery/archives that opened in June, are also proliferating. And, while even five years ago vacant storefronts were a common sight downtown, now the main drag is bustling with new ethnic restaurants and fashion boutiques. (Over the past year, doors opened on the city's first Afghan, Lebanese and vegetarian eateries.) By the end of September, 21 cruise ships will have docked in the harbour; when the 940-guest Crystal Symphony arrived in early September, one holidaymaker spent more than $1,000 at Nonia Handcrafts, a quaint souvenir shop close to the dock.

St. John's also prides itself on its marine expertise, and its ocean-oriented businesses are making their mark. The Canadian Centre for Marine Communications worked with the Geological Survey of Ireland and Ireland's Marine Institute to complete the Irish National Seabed Survey, and is now promoting its seabed-mapping expertise to international markets. Meanwhile, Oceanic Consulting Corp., with more than 200 researchers and engineers on staff, specializes in testing ship designs, and has had success designing multimillion-dollar yachts for the America's Cup.

Islanders seem both astonished by, and ecstatic about, the change that has occurred. “It's inconceivable that a place like this could have opened up 10 years ago,” marvels Bill Coultas at the Five Island Gallery in Tors Cove, about 40 kilometres south of St. John's. His daughter, Laura, opened the small art gallery three months ago. Since then, more than 500 visitors have passed through. Bill Coultas also notes that Ontarians and New Englanders are starting to buy up property along the Newfoundland coast, paying local carpenters, plumbers and electricians to turn dilapidated cottages into fancy summer homes with stunning ocean views.

The reversal of fortune is reflected in construction statistics for St. John's. In 2004, $233 million was spent on building permits, compared with just $81 million in 1997. Lots of that can be chalked up to the gentrification of the downtown, where real estate prices have skyrocketed. In the newly trendy neighbourhood, homes that sold for $50,000 five years ago now go for more than $250,000. “Ten years ago, if I'd told you property was going to sell in downtown for $300,000, you'd have told me I was nuts,” says Mayor Wells.

The hospitality sector is also the source of much activity. Since the Mile One Stadium and adjacent convention centre opened four years ago, the St. John's conference market has blossomed, infusing the city with money and necessitating the construction of more hotel rooms. In the two-year period from January 2004 to December 2005, St. John's will see eight new hotel/motels and two major hotel expansions added to the marketplace, effectively increasing the room supply by 37.2%, to 2,321 rooms.

But for all the new money, St. John's is hungry for more action. For one thing, the next anticipated oil project, the Hebron, has yet to be confirmed. The lull is troubling. What's more, while unemployment rates in the city have come down to about 10%, the rate for the province on the whole is closer to 17%, and rising. Hopes run high, moderated by a population accustomed to boom and bust cycles. “It has been a long time coming, but it is starting to build,” says Mayor Wells. “Over the next 10 years, we're going to see major development. We're on our way.”