Ontario prunes property-and joins a growing trend
The Ontario government is putting the finishing touches on a $100-million renovation that turned Toronto’s upside-down pyramid into a showcase eco-friendly office.
The unique brown brick building at 222 Jarvis St., whose floors get progressively wider from bottom to top, was built 40 years ago, in an era when energy was cheaper and narrow windows were in vogue
The Ontario government bought the nine-storey former Sears Canada office building in 2007, and almost immediately gutted it for a total reconstruction touted as a showcase of Ontario’s commitment to bring its office buildings up to compliance with the Leadership in Energy and Environmental Design (LEED) Silver standard.
The removal of hoardings a few weeks ago revealed a new multi-storey glass curtain on its facade that flattens the building’s profile from the street and lets the sun shine into an expanded atrium lobby through bigger windows. Other new features include energy-efficient heating and cooling, collectors for rainwater and solar panels on the roof to power lights that go on only when people are in a room.
But just as employees from four Ontario ministries get ready to move into the newly greened digs, the government is putting 222 Jarvis and seven other office buildings it owns around the province up for sale.
As this year’s budget put it: “The government’s main business is to provide services to the public. Being a landlord should not be a core function of government; the private sector can manage office space better and at lower cost.” Ontario hopes to get a lump sum of $500-million up front and save $300-million in costs over 25 years on the leases it would sign.
There may be savings in government selling older properties that are in need of cosmetic improvements and system upgrading, and there are a lot of REITs that look for properties they can upgrade and then turn around and sell after the improvements are made, Prof. Andrew agrees.
But he finds the sale of the Jarvis property puzzling. “I don’t want to be critical, but why would they invest all those millions into bringing it to state of the art and then turn around and sell it and then pay rent to someone who will reap the benefits? I doubt they can be sure that a buyer will pay a huge premium above what they’ve already put into the complex.”
Ontario’s Mr. Moore said “the plan is to sell and lease back these properties in an open, fair and competitive process that ensures value for Ontarians.”
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