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Today we present a guest post from Dean Macaskill, Senior Vice President at Lennard Commercial Realty. Dean has worked as a commercial realtor since 1980 and has years of industry insight into the Toronto real estate market. Having been through three cycles in the business, he has seen the highs and lows. He'll be sharing some of his insider information and insights with UrbanToronto on a regular basis.
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“Up, Up and Away” was a great song by the 5th Dimension, if you’re old enough to remember, along with “Ain’t No Mountain High Enough,” songs that may have foreshadowed where the price of high rise residential land was heading.
Having just completed the 4th Quarter Q Investment Report, this writer felt like Rip Van Winkle because the last time he looked, land values were in the $100 per square foot buildable range in the Yorkville and Entertainment District. By the way, this slumber started near the beginning of 2017, not five years ago.
So, when writing the report something very noticeable occurred. The prices per square foot shot up over $200 per square foot buildable, in a number of instances. For example, KingSett sold the former Toronto Parking Authority garage property that fronts on both Yorkville Avenue and Cumberland Street to Cresford Developments for $247.82 per square foot buildable. Concord Pacific picked up 40-58 Widmer Street near Richmond Street West for $257.60 per square foot. To top that off, Lanterra purchased the corner of Bay and Scollard from BRL Realty for a value equivalent to $379 per square foot!
The first $200 per square foot property sold that this writer remembers was in the second quarter of 2016 when it was reported that the assembly completed by Mizrahi Developments on the southwest corner of Yonge and Bloor had equalled a value of $259 per square foot. Surely this property would go into default and it would become the poster child of the excesses of the market. Today, the site has been populated with shoring rigs, and construction is underway! The only property that came close at that time was Cresford’s acquisition of the corner of Yonge and Dundonald Street, near Wellesley at $199 per square foot buildable in the same 2nd Quarter of 2016. Then it got quiet. Then Freed Developments sold the Howard Johnson Hotel property on Avenue Road north of Yorkville in the third quarter of 2017 for $20,125,000 or just over $200 per square foot buildable based upon an approved development of 100,000 square feet.
Other than these transactions, there was very little discussion about where prices were heading as these were anomalies, not the norm when virtually everything else in a prime market was hovering around $100 per square foot. Now we report in one quarter three deals in excess of $200 per square foot. Also, we could add the acquisition of 60 Yonge Street by Lanterra into this mix. The site is improved with an office building tenanted by the Bank of Montreal, who was also the vendor. The selling price of $55 million equates to a value of $268 million an acre, assuring that this property, once zoned for condominium use, will easily exceed $200 per square foot buildable.
Your children’s condo just got a lot more expensive. The majority of these high dollar trades were for approved product although the Mizrahi deal at Yonge and Bloor was pioneering without an approved development, nor is the 60 Yonge Street deal approved. So prepare yourself for 2018 and don’t forget the deal done in Vancouver on West Georgia announced in December. That property traded for $615 per square foot buildable making Toronto still a bargain in the process.
