Toronto Southcore Financial Centre & Delta Toronto | 159.71m | 45s | GWL | KPMB

[TOareaFan]

Not laughable at all given the history of the site
http://www.toronto.ca/legdocs/mmis/2009/te/bgrd/backgroundfile-20290.pdf

There is supposed to be a restrictive covenant on the Ice site to ensure that residential development does not occur on the non-residential portion of the site for a period of 50 years from December 31, 2008.... so assuming that the paperwork went through as described in the staff report, they wouldn't be allowed to convert the Ice office site to condos until 2059

What I said was laughable was the notion that the entire downtown core was eroding (it is not, it is thriving and adding new office space) because, as someone had suggested, all of the office sites had converted to condo......every city goes through rezonings as time evolves and the correct use for any individual lands becomes more apparant.....to suggest, however, that one site changing use was an example of an eroding downtown is what I suggest is laughable....and I still feel that way.

 

[taal]

The vacancy rate is increasing......"skytrocketing" is a bit of an exageration. Toronto has never been a "spec" office market. The level of pre-leasing varies from building to building depending on ower/developer and lender risk tolerance but the original Bay/Adelaide Centre (the Trizec one from the late 80's early 90's that ended up being capped) was probably (if my memory serves me correctly) the last "shovel in the ground without any tenants" true spec office start we have seen.

argg, unfortunately most on UT have no idea what they're talking about in regards to this ...

Actually, vacancy rates declined last quarter in the downtown market - a lot of big banks were heavily leasing up space in the CORE. Will this likely be sustainable, no ...

This has nothing to do with the whole 416 vs 905 debate - which is entriely based on taxes, that is, you pay a lot more of them for businesses in Toronto.

80 million is the amount of office in the central core (that's not all of the 416 ... that's basically only the old city of Toronto, there's quite a bit more outside that in the 416 and a bunch in the inner 905). It's likely they just combined the markets together (which they do all the time, even with other cities).


Building residential property throughout the city wherever we see fit is not laughable at all - particularly downtown where cheep space is harder to come by - demolishing large buildings and replacing them with larger buildings does cost quite a bit. In no way should we permit ice III for example as that erodes on the available cheap space left in the core.

I like the mix we're seeing now to be honest - maybe a little bit more in the way of office space would be nice as well.

But taxes do come into play there and that's something else Toronto needs to work on (different debate altogether and again this hurts the outer 416 the most).

 

[TOareaFan]

argg, unfortunately most on UT have no idea what they're talking about in regards to this ...

well. if I know nothing, then I really have wasted the last 25 years!

Actually, vacancy rates declined last quarter in the downtown market - a lot of big banks were heavily leasing up space in the CORE. Will this likely be sustainable, no ...

It is inevitable as the new supply comes on that there is an increase in vacancy rates....we just cannot produce the sort of space absorption that is needed to keep rates as low as they are. That said, vacancy rates in the Toronto market are not at all unhealthy.

Building residential property throughout the city wherever we see fit is not laughable at all - particularly downtown where cheep space is harder to come by - demolishing large buildings and replacing them with larger buildings does cost quite a bit. In no way should we permit ice III for example as that erodes on the available cheap space left in the core.

Again, what I said was laughable is the notion that Lanterra/CF applying for a rezoning here was any indication that the downtown is eroding and that all sites were going condo (even if the rezoning were approved). As for Ice III.....not sure that I wouldn't approve it. You would have to judge what the goal was for the area before all the development took place. There was, clearly, a desire to not have the area just be a condo village without any employment opportunities......so, when those zonings and restrictive covenants were put in place was the hope that south of the tracks could attract 3 full fledged office buildings and a 200k s.f. office component in a mixed use building along with 2 full service hotels, an aquarium and a decent collection of retail? If so, then perhaps the rezoning of Ice III lands is not that hard to swallow....after all it is not even a very good office site and, if that zoning is left in place, may end up being very unproductive lands for quite some time.

 

[taal]

well. if I know nothing, then I really have wasted the last 25 years!



It is inevitable as the new supply comes on that there is an increase in vacancy rates....we just cannot produce the sort of space absorption that is needed to keep rates as low as they are. That said, vacancy rates in the Toronto market are not at all unhealthy.




Again, what I said was laughable is the notion that Lanterra/CF applying for a rezoning here was any indication that the downtown is eroding and that all sites were going condo (even if the rezoning were approved). As for Ice III.....not sure that I wouldn't approve it. You would have to judge what the goal was for the area before all the development took place. There was, clearly, a desire to not have the area just be a condo village without any employment opportunities......so, when those zonings and restrictive covenants were put in place was the hope that south of the tracks could attract 3 full fledged office buildings and a 200k s.f. office component in a mixed use building along with 2 full service hotels, an aquarium and a decent collection of retail? If so, then perhaps the rezoning of Ice III lands is not that hard to swallow....after all it is not even a very good office site and, if that zoning is left in place, may end up being very unproductive lands for quite some time.

Sorry about that, I actually wasn't targeting your post in particular with that comment - just hit quote.
As I said, vacancy rates have actually fallen in the last quarter ... which is a good sign, even if it's not sustainable.
And yes I agree, our numbers are not at all unhealthy, in the core (central market) they're quiet low compared to many large US cities (actually just about all of them) and as of now the news stories regarding out rates jumping up because of these new buildings actually hasn't materialized it self - btw, just about all the new buildings (including 18 York) are 80% leased or better.

You seem to be ignoring my tax argument there I know that's played out in a few other threads but that is the real issue we face - while the central market seems to be holding its own (again, more office construction would be nice though -> implies there are people to fill these offices) other areas of the 416, airport east / Scarborough that have 15-20% vacancy rates, these are not healthy (but to honest, pretty common in even US cities in certain areas - Chicago has quite a few of these). Either way, one must ask the question, if taxes were on par, would we have seen / will see much more in the way of new office space throughout the entire 416?

 

[TOareaFan]

You seem to be ignoring my tax argument there I know that's played out in a few other threads but that is the real issue we face - while the central market seems to be holding its own (again, more office construction would be nice though -> implies there are people to fill these offices) other areas of the 416, airport east / Scarborough that have 15-20% vacancy rates, these are not healthy (but to honest, pretty common in even US cities in certain areas - Chicago has quite a few of these). Either way, one must ask the question, if taxes were on par, would we have seen / will see much more in the way of new office space throughout the entire 416?

I was only ignoring it because I don't think it is particularly relevant in the context of the southcore....it is a city wide issue, yes, but I don't think it really plays on what is built here any more than elsewhere.

Yes, taxes in the 416 are higher than in the 905 and that has led to some of the outer 416 office areas having higher vacancy than nearby 905 office nodes. I don't think it will ever really erode the core, though, as there are so many other factors at play....not the least of which is access to workers......most (all?) of our transportation infrastructure is geared towards getting people downtown.....so, higer taxes aside, that is where offices prefer to be. It is funny, to me anyway, that we fret and panic over vacancy rates (in any class of real estate) when they are in the 15% range........I recall a conversation I had with a major US industrial developer who was starting to build here....we were surprised 'cause it was when our industrial vacancy (GTA wide) had blipped over 5%....he laughed because when vacancies in major US cities drop to 15% his company moves in and builds on spec! Just a different approach which, in part, explains how US commercial real estate is far more "boom-bust" cycled than ours.

Being so close (and dominated by their media) we really have a perspective challenge when it comes to our own markets.

Back on topic, though, I think the decision about those "ICE III" lands (if any rezoning app comes forward) will come down to allowing a rezoning to fill in that gap of land with a tax generating condo building or leave the zoning in place and hope for a "not coming soon" office property......I just feel that this area has the office space it needs for the next, I don't know, 10 - 15 years.

 

[taal]

Why do you say that? Because there's no more demand for new offices for the next 10 - 15 years? Why would they build an office on spec (which I still doubt they will) on the lands beside 18 York (i.e. the delta hotel)?

 

[Big Daddy]

....after all it is not even a very good office site

How on earth do you come by that? Underground PATH access to union station, immediately adjacent to Canada's financial district, close to many major hotels. Just what is your criteria?

 

[TOareaFan]

Why do you say that? Because there's no more demand for new offices for the next 10 - 15 years? Why would they build an office on spec (which I still doubt they will) on the lands beside 18 York (i.e. the delta hotel)?

I guess what I am saying is that amongst the other sites in the SouthCore area it is the weakest office site of the lot. So, it makes sense to me, it is the one least likely to ultimately become an office site.

I doubt, also, that the second office phase of the BCIMC/GWL project will go ahead without a lead tenant....but if it does it probably has more to do with "completing" the project........having the hotel part of their project connected to Union via the two office phases probably means completing the second office phase (even if it is a bit "tenant lite" at commencment) makes sense.

ICE III does not have (nor can I see it having) underground connection to Union...it may have underground connection to MLS which then leads to an overground connection to Union but, again, compared to the other office sites in this area it is the weakest......yes, as Big Daddy points out, in isolation it has "access to union station, immediately adjacent to Canada's financial district, close to many major hotels."......but in each of those criteria it is weaker than the two BCIMC buildings, weaker than Telus and weaker than the office component of MLS......of the office sites in the area it is the weakest and, IMO, the one most likely to not go ahead as planned.


EDIT: I may be dealing with incorrect information here.....Big Daddy's yellow box shows the site as being the south west corner of Bremner and York....it is, at least, 2 years since I looked at the plans for ICE but it was my understanding that the two residential towers were on the northernmost parts of the site and the commercial site was closer to the Gardiner sorta tucked away in the southwestern part of the site.........if it is right at the intersection (as the yellow box indicates) it is probably does slightly better in comparison (but it is still not as good) as the other office sites.

 

[AlvinofDiaspar]

but in each of those criteria it is weaker than the two BCIMC buildings, weaker than Telus and weaker than the office component of MLS......of the office sites in the area it is the weakest...

That's like saying what, FCP or TD Centre (much less RBC Dexia or Metro Hall) doesn't make sense as a site for high rise office towers because it involves multiple trips in the PATH system to get to Union Station. When the west concourse for GO at Union station opens, the site would be even more accessible than say FCP in many ways.

AoD

PS: Big Daddy's interpretation of the site is correct.

 

[TOareaFan]

That's like saying what, FCP or TD Centre doesn't make sense as a site for high rise office towers because it involves multiple trips in the PATH system to get to Union Station.

No it isn't.....what I said was that it has weaker proximity to the things that Big Daddy points out as making it a good office site than its competitors do. That is all...and if you believe (as I do) that there really is a limit (be it short or medium term) to how much office space this node can absorb then this weaker site which has been preceded by announcements on all the other sites is the least likely to have an office building built on it.

AoD

PS: Big Daddy's interpretation of the site is correct

So the office site is the northernmost (ie right at the corner)? Then it is better but still not as good (qualitative judgement but it only matters to me) as the others and since there are no plans it is last in quality and speed

 

[AlvinofDiaspar]

Please feel free to compare the distance from Union to the proposed site, Bremner Tower and say FCP. Your measure is simply inaccurate.

AoD

 

[Edward Skira]

The point was not that office space is leaving rather the preservation of land for future office space. The city doesn't want to get to the point that all the prime areas for office have been taken over by condos. You can put condos almost anywhere (old Molson land at Bathurst and Fleet) for example. You can't do the same with Class A office space. This is starting to be a problem in Vancouver where much of the best land for office space has gone condo to the point the city is worried downtown is being harmed.

 

[TOareaFan]

Please feel free to compare the distance from Union to the proposed site, Bremner Tower and say FCP. Your measure is simply inaccurate.

AoD

If I was comparing the site to FCP I would...but my comparison has been, consistantly with the other office projects in the node in question.....this just in....all of the offices out by the airport are further from Union than FCP but they have other reasons for being good sites......when this site moves into the same office node as FCP measuring the steps to Union and comparing the two will make sense....no one brought FCP into this discussion until you did...so you do the measuring.

 

[TOareaFan]

The point was not that office space is leaving rather the preservation of land for future office space. The city doesn't want to get to the point that all the prime areas for office have been taken over by condos. You can put condos almost anywhere (old Molson land at Bathurst and Fleet) for example. You can't do the same with Class A office space. This is starting to be a problem in Vancouver where much of the best land for office space has gone condo to the point the city is worried downtown is being harmed.

If it is, or becomes, widespread then I agree you have an issue....when, as we are here, you are discussing the hypothetical application of one site in an area that it would be hard pressed to say "has not seen new office development" then I really don't think it is an issue.

 

[AlvinofDiaspar]

TOareafan:

MY point of comparison is that miniscule differences in location and accessiblity is an absolutely meaningless measure of its suitability as a site for office uses in the grander context, which also suppliments the greater argument that such a level of accesiblitily is meaningful in comparison between uses, vis-a-vis office vs. residential.

If it is, or becomes, widespread then I agree you have an issue.

By the time it is or becomes an issue, it is clear the planning regimes have already failed. Surely you aren't proposing to wait until something becomes an issue before acting - which is the very antithesis of planning (read forethought).

AoD