Toronto's boom gives real estate developers plenty to build on
It is hard to talk about Toronto commercial real estate without sounding like some boosterish character out of a Sinclair Lewis novel. The city is booming, unemployment barely exists, and rents for office space have reached $50 (Canadian; US$41.50) a square foot. In the next five years, at least 10 million square feet of office space will be built in downtown Toronto. The total available office space is now 35 million square feet. That doesn't count midtown, North Toronto, or the suburbs where many firms are being forced to move because of the lack of space downtown.
``It is difficult for an outside investor to get involved in a deal of $100 million or more in the downtown core. The domestic developers have it all sewn up,'' says Christopher Ridabock, a Toronto commercial real estate broker who is also president of Downtown Toronto Business Council.
Downtown Toronto has the lowest vacancy rate of any big city in North America - 3 percent - and builders are working to fill the gap. There are at least 18 projects under way, at a total cost of about C$5 billion, and most of them will be finished in the next two to three years.
Here are a few of the major real estate developments now under way:
Simpson's Galleria. It takes up three city blocks south of Simpson's Department Store and includes a 53-story tower and 10-story tower, along with subsidized housing - at government insistence - and a park.
Scotiaplaza. Campeau Corporation's 1.5 million-square-foot building will be totally completed in 1989, although many tenants are already in it.
The fifth tower of the Toronto Dominion Centre. This 31-story building incorporates the old Art Deco Toronto Stock Exchange building - at government insistence. The 500,000-square-foot building will be completed in 1990.
BCE Place. This is the biggest development of them all, with 2.4 million square feet in two phases, a 51-story and a 42-story tower. It is being built by BCE Developments (BCE is Bell Canada Enterprises, the phone company) for $800 million, with the first tower to be completed in 1990.
World Trade Centre. The first phase of this 1.7 million-square-foot office and condominium project is a 512,000-square-foot office building to be completed by 1990, while the second phase, a 28-story tower, will be done in 1992.
That list does not include the new domed stadium and its related hotel and office complex as well as other developments planned for railway lands that have been abandoned in the downtown core.
Is Toronto overbuilding? Some contrarians say the city's residential real estate sector, where prices are up 26 percent in the past year, is headed for a fall.
``They are not overbuilding downtown. There has been a limited amount of construction and there is a pent-up demand for space,'' Mr. Ridabock says. ``The demand is a million and half to 2 million square feet a year.''
``There's even the emergence of pockets of high-tech office space. For instance, the new King Business Centre on the site of the old Massey-Ferguson about a mile west of the downtown core,'' Ridabock says. ``Bell Canada and a major financial institution will occupy 1 million square feet for computer and communications related space.''
And there is, of course, the changed character of even a new city such as Toronto. The city is little more than 150 years old, but little remains of its past.
``If the new buildings had some architectural merit, I wouldn't mind, but apart from the Royal Bank Building I can't think of one that has,'' says a stockbroker whose favorite restaurant, Maison Basque, is about to come under the wrecker's ball to make way for a new tower. ``Now we have to eat in malls,'' he laments.