Nidea Celebrates 15 Years!
We are thrilled to announce that we are celebrating our 15th Anniversary! We want to thank all of our clients, partners, and friends that have trusted us along the way. Our ongoing success would be impossible without you.
Here's to the next 15 years!
Developers bet on market rebound with massive Toronto complex
Oxford Properties and the real estate arm of Canadian Tire have announced plans for five office and apartment skyscrapers in midtown Toronto, as landlords bet on the market rebounding despite the pandemic driving workers from office towers and slowing demand for downtown condos.
This is the second large office development in the city announced this month, and comes as the office and condo markets soften. The office vacancy rate has nearly doubled to 4.7 per cent since last year with tenants big and small offloading space. As well, apartment rental rates and condo prices have dropped amid the glut of new condos.
“There is a lot of concern today about developing large office spaces and condos when we are seeing vacancies going up. But we have to disentangle the short-term impact of working from home,” said Carl Gomez, chief economist with CoStar Group, a commercial real estate company. “At some point we will return to work.”
Oxford and other office landlords are betting that workers will return to using corporate offices and that companies will continue to view Toronto as a top destination, with firms such as Amazon.com Inc. recently brokering large office leases in the city.
For Oxford, the 9.2-acre site at the busy intersection of Yonge Street and Eglinton Avenue will be its largest development in Toronto. It is also the most high-profile project for CT Real Estate Investment Trust (REIT), which was spun out of Canadian Tire in 2013 to make money from its large portfolio of retail properties.
Under the proposal, the tallest building will be 60 storeys and the shortest will be 45 storeys, according to Oxford. The five towers will include 650,000 square feet of new office space, 2,700 new housing units and 10,000 square feet of community space. About half of the site has been set aside for green space.
The housing units will be mostly apartments or purpose-built rental units, with the majority of the units one-bedroom and studios.
Oxford, the real estate company of Ontario Municipal Employees Retirement System (OMERS), and CT REIT will co-own the project. Oxford, which co-developed the 28-acre Hudson Yards office, condo and retail district in Manhattan, will develop the Toronto project and manage the property on behalf of the partnership.
CT REIT, which mostly leases to Canadian Tire and its other brands, is following in other retail landlords’ footsteps and has identified dozens of its sites, from Corner Brook, N.L., to Dawson Creek, B.C., as ripe for development. (Canadian Tire’s corporate home office is located in one of the buildings on the Toronto redevelopment site, according to its website.)
Shopping centre owners such as RioCan REIT and SmartCentres REIT have been redeveloping their retail locations into ones that include housing and office space, including RioCan’s redevelopment at the same intersection.
Yonge and Eglinton is a popular residential and shopping spot on the main north-south subway route in Toronto. The area has become a destination for developers with a new east-west light rail transit line being installed on Eglinton Avenue.
A spokesman for Oxford would not provide the cost of the development or say if the partners would be splitting the costs evenly. CT REIT did not respond to a request for comment.
If the plan is approved, construction would start after the new public transportation is finished, which is scheduled for the fall of 2022. After that time, the project is expected to take up to five years to complete. Currently, the site has three office buildings, which will be demolished for the new development.
Earlier in December, Dream Office REIT announced plans to build a 79-storey building just west of Toronto’s financial district; the project would include 660,000 square feet of office space, 588 residential rental units and 10,000 square feet of retail and restaurant space.
Downtown Toronto office vacancy rate hits highest level
Office vacancy rates have climbed across the country during the pandemic, with downtown Toronto’s jumping to 7.2 per cent in the fourth quarter, as tenants tried to offload space and did not renew leases after months of having their employees work remotely.
Downtown Toronto’s vacancy rate was more than 50 per cent higher than the 4.7-per-cent rate in the third quarter, and hit its highest level since the economic turmoil of the global financial crisis a decade ago, according to the latest report from commercial real estate firm CBRE. Space available for sublet represented almost half of the vacant space – a record high.
Until the pandemic struck, Toronto had been the crown jewel in North American office markets. The city had a vacancy rate below 3 per cent from 2018 through early last year - the lowest level across major cities in Canada and the United States, including Manhattan and San Francisco.
But months of remote work have made some companies believe that their employees can function adequately outside of the office, and that has prompted them to give up some of their office space. The pandemic’s devastating impact on tourism, retail and hospitality has led companies in those industries to also look for ways to reduce their space.
Over all, Canada’s office vacancy rate rose to 13 per cent in the fourth quarter, from 11.5 per cent in the third, with every major business hub in the country seeing more vacancies and sublets: Vancouver reached a 5.8-per-cent vacancy rate, Montreal hit 10 per cent, Calgary 30 per cent, Edmonton 20 per cent, Ottawa 9.5 per cent and the Waterloo region 14 per cent, according to CBRE.
“The impact from working from home will take years to play out because leases don’t all roll over at once,” said Paul Morassutti, CBRE Canada’s vice-chairman. “Tenants are evaluating how they are working through the crisis.”
Rental rates remained relatively steady across the country, including in downtown Toronto, the biggest office market in the country.
The shift to remote work is occurring as a stream of new office buildings are under construction in Toronto, with some about to open their doors to tenants, including a 49-floor skyscraper with 1.5 million square feet. The increased supply had always been expected to push up vacancy rates and slow rent increases.
The prolonged work-from-home mandates have had office tenants grappling with how much space they will need in the future, as well as how their work force will function best when the pandemic eases.
“I don’t think it means the death of the office market at all,” Mr. Morassutti said. “But by the same token, to suggest that there will be no impact whatsoever strikes me as being a little bit illogical, and not aligned with what we are seeing out there today.”
Last year, traditional office users such as PricewaterhouseCoopers, Cisco Systems Inc., Oracle Corp., Air Canada and PC Financial tried to sublet some of their downtown Toronto space.
At the same time, companies that have prospered in the pandemic – Amazon.com Inc. and Shopify Inc. – increased their floor space in downtown Toronto. Amazon expanded its presence in two buildings. Shopify took more space in a new building even after its chief executive had said the era of “office centricity is over.”
As traditional office tenants give up space, there are questions about whether there are enough Amazons and Shopifys to fill the new space and whether the big banks and other financial services companies will reduce their space when their leases are up for renewal.
In Calgary, which has suffered from two oil downturns over the past decade, office landlords have struggled to fill their buildings. Since the 2014 oil recession, the major tenants – oil companies and those that service the oil industry – have been retreating and shrinking their office footprint. That took place as big developers built their new office buildings, leaving the city awash in office space.
Toronto can't build office towers fast enough
A decade ago, an office landlord might have gone into crisis mode upon learning a tenant as big as Canadian Imperial Bank of Commerce was preparing to flee to a new development down the street. But these days, perhaps nothing says more about demand for office space in downtown Toronto than QuadReal Property Group’s response to precisely that scenario.
Crown is pleased to welcome 411.ca to 1500 Don Mills Road, Toronto
411.ca is Canada’s #1 exclusively online directory, connecting local businesses with local people across Canadian neighborhoods. 411.ca offers a suite of business solutions, from marketing services like custom websites and search engine marketing to exclusive Entrepreneurs Club memberships. Professional but not traditional, 411.ca’s Toronto and Montreal offices work with all types of businesses, from contractors, landscapers, and realtors to restaurateurs to help all entrepreneurs launch and find new ways to grow their business.
The group celebrated the grand opening of its new 25,000 square foot office at 1500 Don Mills Road last week. Home to over 100 team members, the new office is designed with modern finishes, several non-traditional spaces for cold calling, team breakouts and meetings. Crown is glad to have worked with 411.ca to bring their office vision to life alongside their designer, Comley Van Brussel, their general contractor Contech and their real estate agents at Nidea Realties Corporation.
Welcome to 1500 Don Mills Road, we are excited to have 411.ca as a tenant!
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