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Commercial Real Estate- all things related to commercial real estate in GTA

Davidackerman

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33 Yorkville for sale-

33 Yorkville Avenue, Toronto has just been offered for sale by CBRE and RBC. Arguably the best residential development land in Canada, site plan approved for ~912,700 sf of residential and retail density. For access to the online data room and Confidential Information Memorandum, please contact Kristal Shea at CBRE.
 

Davidackerman

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New Amazon fulfillment centre to be opened in Ajax. - courtesy of Goran Brelih




his has been the second quarter operating under COVID-19 and the resulting economic shutdowns. Obviously, events had a big impact on commercial real estate across the board, but it looks like, on the surface, that it wasn’t as tough on industrial. In fact, the growing trend of e-commerce has pushed industrial demand to new highs. Both warehousing and logistics, as well as cold-storage users have been snapping up space and creating an even more competitive environment.

The GTA-East Industrial Markets
are the smallest in the GTA with about 43,000,000 SF; just 5% of overall Industrial Inventory in the entire region.
Key Takeaways from Q3 2020
  • 1.822 Million SF was under construction;
  • We had 734,295 SF of new supply;
  • The overall vacancy rate was just 1.5% with 1.4% available for lease and 0.1% available for sale;
  • Weighted average asking lease rate was $7.12 PSF; and the
  • Weighted average sale price was $172.04 PSF.
Interesting Announcement this Quarter

Amazon to open a new fulfillment centre in Ajax in 2021

At this new one-million-square-foot fulfillment centre, more than 1,000 employees will pack and ship large customer purchases such as sports equipment, patio furniture, fishing rods, pet food, kayaks, bicycles, and other household goods.

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300 Rossland Road East, Ajax

So, if you are an Investor, Landlord, or Owner-Occupier you may be wondering…
“How much is my property really worth?”

What rental rate can I expect? How much $/PSF would I be able to get if I sold my building?

These questions are being asked all the time.

The answer to this will depend on a range of factors, including:
  • the age and size of the building,
  • lot size,
  • ceiling height,
  • office component,
  • parking,
  • trucking access,
  • truck parking if available, etc….
In order to get to the truth, we need to dig a bit deeper...
This week we are covering the Toronto-East Markets (Pickering, Ajax, Whitby & Oshawa)
Statistical Summary - GTA Industrial Market - Q3 2020

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Q3 2020 Cushman & Wakefield Industrial Market Statistical Summary
So let’s take a closer look at how the different Toronto East Markets performed during Q3 2020…

GTA East Markets (Ajax)
Properties Sold
between July 2020 - September 2020, from 20,000 SF plus

426e1776-9944-4095-9948-20f7089a5f1c.png


In Q3 2020, a total of 2 properties (totaling 137,750 SF) were sold. The prices achieved were in the range of $123 - $154 PSF, with an average building size of 68,875 SF and an average price of $138.50 PSF. Both were investment sales.

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555 Beck Crescent, Ajax

GTA East Markets (Pickering & Ajax)
Properties Leased
between July 2020 - September 2020, from 20,000 SF plus

f2216de2-1725-4362-bc09-93a61f431495.png


On the leasing side, a total of 3 properties (totaling 1,108,136 SF) were leased. The net rental rates achieved were from $8.00 - $9.50 PSF, with an average building size of 369,379 SF and an average net rental rate of $8.75 PSF.

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895 Sandy Beach Road, Pickering

What Lies Ahead:
  1. Rental Rates: Net rental rates in the GTA East markets are considerably lower than rates in the other GTA markets due to lower general land values. Despite this, increases in online retail sales, moving away from “just in time” inventory, and relocating parts of manufacturing back to Canada from overseas (and including the production of PPE equipment) will continue to put pressure on industrial markets; keeping net rental rates steady and increasing, although maybe at a slower pace. Overall, we have seen an increase in net rental rates in Q3, and this trend is likely to continue…
  2. Property Values: Property values are being pushed upwards given the low availability rate, great demand, and cheap cost of capital. Everyone is looking to acquire industrial real estate, which has weathered the storm better than any other asset class. We see buyers - users, occupiers, and investment funds - looking for industrial assets. Values will continue to appreciate accordingly.
  3. Development Opportunities: We have 1.8M SF under construction in the GTA East Markets. New speculative construction is being delivered by a number of major developers such as Panattoni, Carttera, PIRET, and Crestpoint with Blackwood Partners.
Conclusion:

So, how much is your property really worth?

What rental rate can you expect or how much per SF would you be able to get if you sell your building? How much can we compress CAP rates to create even greater value?

Well, the answers to these questions will depend on a variety of factors, many of which we can quickly uncover in an assessment of your situation.

And with our vacancy rates, rental rates, and valuations having hit all-time highs right before COVID-19 took place, there may be plenty of opportunities to find creative solutions; whether it be through rightsizing, refinancing, bridge financing, sale-leasebacks, or otherwise.

While there may exist challenges in execution, Buyers are ever more hungry for product. Local, high-net-worth developers and investors are often active in bottom-of-market conditions. And well-capitalized institutional investors and pension funds are still willing to take a look at a deal if the numbers make sense.

Furthermore, a number of our clients are considering sale-leasebacks to re-capitalize their operations.

For a confidential consultation or a complimentary opinion of value of your property please give us a call.

Until next week…


Goran Brelih and his team have been servicing Investors and Occupiers of Industrial properties in Toronto Central and Toronto North markets for the past 25 years.


Goran Brelih is a Senior Vice President for Cushman & Wakefield ULC in the Greater Toronto Area.

Over the past 27 years, he has been involved in the lease or sale of approximately 25.7 million square feet of industrial space, valued in excess of $1.6 billion dollars while averaging between 40 and 50 transactions per year and achieving the highest level of sales, from the President’s Round Table to Top Ten in GTA and the National Top Ten.

Goran is currently serving as Immediate Past President of the SIOR ‐ Society of Industrial and Office Realtors, Central Canadian Chapter.

Specialties:
Industrial Real Estate Sales and Leasing, Investment Sales, Design-Build and Land Development

About Cushman & Wakefield ULC.
Cushman & Wakefield is a leading global real estate services firm that delivers exceptional value by putting ideas into action for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 employees in approximately 400 offices and 70 countries.

In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and project management, leasing, capital markets, advisory, and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.

For more information on GTA Industrial Real Estate Market or to discuss how they can assist you with your real estate needs please contact Goran at 416-756-5456, email at goran.brelih@cushwake.com, or visit www.goranbrelih.com.
 

Davidackerman

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I attached a list of Non residential charges for construction and development - courtesy Urbacon
 

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  • Non-residential development charges 2020-11-11.pdf
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Davidackerman

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update on Q4 high rise sales courtesy of Lennard commercial sales

High Density Residential Land Sales
We note similar sales volumes in this sector when compared to Q3 although the number of high dollar sales is up by four to 22 this time around. We open with a big one and it’s a distress sale (oxymoron?) at $171,928,033 and pertains to the property located at
480 Yonge Street, acquired by QuadReal from the Ontario Superior Court of Justice. The property measures 0.453 acres and was subject to a redevelopment proposal approved in 2017 to permit a 39 storey, mixed-use development encompassing 353,512 square feet of development located within 425 units. The development indicates a value of $486 per square foot buildable. Although initially marketed by Cresford
as a condominium project, QuadReal are changing course and will utilize the building for apartment rentals. At the time of sale, the development was under construction, helping to justify the high dollar per square foot buildable cost.
4331 Mainway, Burlington
A numbered company intends to occupy 4331 Mainway in Burlington which they acquired for $11,250,000 from Edsco Properties Inc. The building had a selling price of $187 per square foot based upon a building area of 60,043 square feet.
Purdue Pharma, a US based pharmaceutical company embroiled in controversy, sold
one of their Pickering holdings to musical
11 lennard.com

Keeping with the distress sale theme,
we turn to 263 Adelaide Street West, acquired by Lanterra Developments from the courts for $69 million. The 0.335 acre site was approved for a 47 storey, 347,147 square foot development. Based upon the approved development, the selling price provides for a value of $199 per square foot.
With our distress sales out of the way, we report Mac’s Convenience Stores Inc. milking the last dollar out of 241 Church Street, selling the 0.333 acre site to Graywood for $73 million. At the time of writing, no development application had been submitted for the site.
The QTM Investment Report
Q4 : 2020
240 Adelaide Street W, Toronto
The Well development on the former Globe and Mail site at Front Street and Spadina sees RioCan selling the air rights for residential rental development above the commercial development of this mixed-use site. Two towers of 16 storeys each with
a total development of 339,451 square feet was approved in 2019, resulting in a value of $170 per square foot buildable. The purchaser was Woodburne Capital Management and the offering pertains to parcels A and B of the development.
Harlo Capital acquired 3585-3595 St. Clair Avenue East from Bilinia Investments Limited and Capital 3585 St. Clair East Inc. for $45 million. The site measures 19.719 acres and will combine with Harlo’s acquisition of 661 Danforth Road this past quarter, a 0.363 acre property which cost $2,750,000. The St. Clair property was subject to a development application from 2012 seeking to develop
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241 Church Street, Toronto
Freed Developments purchased an assembly of properties from various owners which includes 224, 230, 236 and 240 Adelaide Street West for a total land area of 0.300 acres. The selling price was $67 million.
At the time of writing, no development application for the site had been submitted.
John Nelson Holdings Inc. and Camwood Properties Ltd. sold their properties at 241 Richmond Street West and 137 John Street to Tridel for $59 million. In return for this consideration, Tridel received 0.431 acres of land. No application for development has been submitted at this time.
12 lennard.com
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118 townhouses, 48 stacked townhouses and 300 apartment units. This writer suspects that the purchaser will have loftier plans for the future development and caution readers to treat this transaction as subject to a future development application with higher densities.
DiamondCorp acquired a large, 6.548 acre site at 5 and 43 Junction Road for $41 million from a private, numbered company. At the time of writing, DiamondCorp was contemplating its redevelopment options for the property.
Mac’s Convenience Stores Inc. was
active again with the sale of 7015-7027 Yonge Street in Markham to Times Group Development for $36 million. The site measures 2.209 acres and no development application has yet been submitted for the property.
Sylvan Hills Holdings Inc. sold 2700 Steeles Avenue West in Vaughan to VNC Holdings Ltd. for $35 million in exchange for 4.068 acres of land. A development application has yet to be submitted.
Alterra and Distikt Capital combined forces to purchase 1500 and 1536 St. Clair Avenue West and 32, 34, and 36 Caledonia Road from three private owners for $32 million. They also acquired 20 Caledonia Road in
a separate transaction this past quarter
for $7 million to obtain 0.396 acres of land to add to the assembly. As of this writing,
no redevelopment application has been submitted.
Pure Plaza closed on the acquisition of
5858 Yonge Street for $23,890,610.40
from a private vendor. This 0.967 acre site was subject to a redevelopment application that was approved in 2018 for a 42 storey development with 408 units and replacement of an existing car dealership on site.
The QTM Investment Report
Q4 : 2020
234 Davenport Road, Toronto
Future Delight Investment Ltd. acquired from a private, numbered company 3280 Dufferin Street for $23,399,999 for 1.270 acres of land. No application for development has been submitted by the purchaser but this writer is sure that what ever is planned will be delightful.
Gluckstein Holdings sold 234 Davenport Road to Tribute Communities for $23,008,235.22. The property measures 0.130 acres. No application for redevelopment has been submitted at the time of writing.
The following is rather confusing and this writer is open to criticism on this one but will report as was presented. The sale pertains
to 1025 The Queensway at Islington Avenue, a site improved with a retail development
that contains a Cineplex theatre, a number of chain restaurants and a bank. The confusion begins with the fact that two sales are listed for the transaction. The first sale sees Talisker Corporation acquiring a 50% interest in 14.618 acres of land from RioCan for $11 million while the second transaction sees Talisker selling a 50% interest in 3.247 acres of land for $20,262,607. The most obvious conclusion is that each own part of the site and have now combined to joint venture the combined 18 acres of land. Although no development application has been submitted,
page13image10274640

13 lennard.com
The QTM Investment Report
Q4 : 2020
RioCan had been trying for a number of years to redevelop the front portion of the site with high rise residential development.
Valleymede Building Ama Corporation sold a 0.661 acre site located at 4577 Steeles Avenue East in Scarborough to a private, numbered company for $17 million.
A development application for the site had not been submitted by the time of writing.
Marlin Spring paid $17 million for 0.972 acres of land acquired from Rexclair Limited located at 2231 St. Clair Avenue West. No application for development has been submitted.
411 Victoria Park Avenue, Toronto
Create TO finally closed on the sale of 411 Victoria Park Avenue. The site, measuring 19.328 acres, sold for $16 million to the Kilmer Group. An application submitted in 2019 sought to develop 5 separate blocks on site. Block One would contain a 12 storey condominium with 364 units. Block Two envisions a 9 storey building with 274 units and 22 townhouses. Block 3 would see a
9 storey building with 209 units. Block 4 would be developed for Habitat for Humanity and contain 58 stacked townhouses while Block 5 would have 119 affordable housing units within an 8 storey building. The total development would see 1,043 residential units being constructed having a combined area of 801,761 square feet including 4,104 square feet of retail space. This application was still under review at the time of writing.
2270-2280 Eglinton Avenue West, Toronto
Two numbered companies acted in the sale of 2270, 2280 and 2296 Eglinton Avenue West and 6 Sanderstead Avenue
for $12,744,000 for 0.593 acres of land. Eglinton Avenue, both east and west, should be off the rails with activity over the coming years as the Eglinton LRT makes its way to completion.
Pemberton Group added to their assembly at Yonge and Elm Streets paying $10 million for 0.110 acres of land for 356 Yonge Street from a private investor. This acquisition adds to other properties acquired at this location which includes 354A Yonge Street, 0.173 acres and 8 Elm Street, 0.164 acres.
The combined site of 0.447 acres sees a total investment to date of $60,800,000.
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356 Yonge Street, Toronto
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Davidackerman

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update on q1- courtesy of Lennard brokerage Dean Macaskill- An excerpt from his newsletter
In review, we mentioned the limited number of high dollar sales in the office sector with only 5 properties selling in excess of $10 million with the winner being the $115 million paid for 55 and 105 Commerce Valley Drive West in Markham by Soneil Investments to Northam Realty. This was about half the value of last quarter’s $215,820,000 sale

for a 45% interest in 145 King Street West.

55 Commerce Valley Drive West, Markham


In terms of volume, we saw a slight drop from last quarter’s 51 transaction to only 44 in
Q1 while only 5 transactions exceeded $10 million in value versus 9 exceeding that mark in Q4, 2020. Other than one sale in the $58 million range, the remaining high dollar sales were closer to the $10 million benchmark.
Similar to the office sector, sales volumes were slightly down in the retail sector with only 125 property transfers versus 144 properties in Q4, 2020. We notched two more high dollar sales this quarter with 11 against only 9 in our last report. We won’t give away details just yet of the high dollar sale other than to say you likely already have a good “IKEA” of what it was. At $100 million, it certainly did close out the quarter with a bang. In addition, we note three other transactions in excess of $40 million in the quarter, numbers we haven’t been seeing in this sector for quite some time.

100-110 Iron Street, Etobicoke

The industrial sector continues its winning ways with 158 sales, down significantly from the 191 sales we saw in Q4, 2020 but we report that 41 of the sales this quarter exceeded $10 million, four more than last quarter’s high-water mark. The top sale
this quarter sees 100-110 Iron Street in Etobicoke being sold by Mantella to Triovest for $125,295,000. We note four properties selling in excess of $30 million, that we will review and another three just below that amount. Inventories of industrial properties

The QTM Investment Report

Q1 : 2021

continue to be low. This writer is seeking
a 30,000 to 40,000 square foot industrial building in Etobicoke and, at this time of writing, doesn’t have one listed option to present to the client. Although location dependent, there wouldn’t be many options even if the search was opened up to the whole of the GTA.

The high-rise sector is the only area in which sales this quarter exceeded sales in Q4, 2020. There were 62 transactions recorded with 24 of those trades being in excess of $10 million. In comparison, we had 52 sales of which 22 were in excess of $10 million

in our last report. So, similar results and we ended the quarter on a high with the sale in Yorkville for $300 million, almost double last quarter’s high sale. There’s not much more to say about the strength of this sector that hasn’t already been said. Appetite for high rise sites continues to be strong with no lack of confidence in developer’s minds that we need to continue building for a continuously growing metropolis like Toronto.

Office Sales

An interesting quarter for this sector.
We noted only a handful of high dollar transactions out of a cohort of 46 sales in excess of $1 million. We have a chicken versus egg conundrum here. Is it a lack of buyers or a lack of product? We sense it’s more a lack of product as few offerings have passed by this writer’s email feed for quite some time. Buyers are out there, the 50% sale of an interest in 110 Yonge Street saw significant activity and offers. You will note that suburban office sales have figured high in the results over the past year with some investors taking the view that work from home is going to be a more permanent thing in the future so companies might migrate all or part of their office functions back to the






suburbs from downtown. Alternatively, the answer may be simpler – no product on the market so you chase what’s out there.
The top sale is located outside of Toronto’s borders and is located at 55 and 155 Commerce Valley Drive West in Markham.
A site improved with two office buildings
with a combined area of 377,944 square feet. The vendor was Northam Realty Advisors who sold the offering to Soneil Investments for $115 million or $304 per square foot.

The site was improved with two buildings
of eight storeys each, measuring 186,390 square feet for 55 Commerce Valley and 191,554 square feet in 155 Commerce Valley. Tenants include AT&T, Avison Young, and AECOM. We’re not sure if your company name has to start with an “A” to be a tenant in this complex.

110 Yonge Street, Toronto

Sutter Hill Management Corp. was the successful bidder for a 50% interest in
110 Yonge Street that was being offered by BentallGreenOak. The selling price of $58 million sees an equivalent 100% value of $723 per square foot based upon 160,541 square feet of rentable area. The building was 94% leased at the time of sale and produced a net income of $4,988,096 for a 4.3% cap

rate, not too dissimilar to pre-Covid cap rates for similar product. This acquisition by Sutter Hill adds to their holdings in the area as they already own 48 Yonge at Wellington Street.

2 Beaver Creek Road, Richmond Hill

Heading back north to Richmond Hill,
2 Beaver Creek Road was sold by Crestpoint Real Estate Investments Ltd. for $19,150,000 or $244 per square foot based upon an area of 78,588 square feet.
The buyer of this four-building offering was
El Regency Group.

Dream REIT acquired 76 Stafford Street and 850 Adelaide Street West from Hullmark for $17 million or $806 per square foot.
The building measures 21,103 square

feet and is your typical brick and beam construction from the early 1900s with no elevator serving this three storey building.

Our last high dollar transaction sees the sale of 68 Claremount Street in the Queen and Bathurst neighbourhood. This building took close to a year to sell but Dream Office REIT saw an opportunity and paid $14,800,000 or $466 per square foot for this 31,750 square foot building that was 35% leased

at the time of sale. The vendor was a private, numbered company.

Randomly looking at some other office transactions, just below our high dollar mark sees 6870 Goreway Drive in Mississauga sell




for $9.2 million or $369 per square foot for a 24,938 square foot building. The vendor was a private, numbered company selling the two-storey structure to Solotel Inc. at a 5.7% cap rate based upon a net income of $524,400 for this 100% leased building.
Also, in Mississauga, 420, 430, 440 and 450 Brittania Road East sold for $9,950,000 or $226 per square foot. The vendor, Strathallen Capital Corporation sold this 44,000 square foot, two storey building to a private, numbered company.
 

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