Re: 43 storey RBC office tower to start construction in July
News report from Tuesday, March 28 (not a lot of new detail):
GLOBE AND MAIL REAL ESTATE
Cadillac tower largest to start in a decade
Planned for Toronto's downtown core, 43-storey building to begin this summer
ELIZABETH CHURCH
A new, 43-storey tower planned for Toronto's downtown core is the largest office project to get off the ground in Canada in more than a decade and is a vote of confidence for the country's largest city, real estate experts say.
Cadillac Fairview Corp. Ltd. this summer plans to start construction on a building west of the financial district, with Royal Bank of Canada as its major tenant, the developer said yesterday.
The new RBC Centre at the corner of Simcoe and Wellington streets will be built alongside a new 53-storey Ritz-Carlton hotel and condominium project. Cadillac Fairview, part of the Ontario Teachers Pension Plan, also is a partner in that development.
At 1.2 million square feet, RBC Centre is equal in size to the city's landmark bank towers and is the largest multitenant office building to be started in Canada since the real estate market meltdown of the early 1990s.
Only EnCana Corp.'s proposed new headquarters in Calgary, which is still in the planning stages, would be bigger.
"We feel there is enough pent-up demand for an offering of this size," said John Sullivan, Cadillac's senior vice-president of development. "It makes economic sense given market conditions to go with a large project."
The building's size also is important, he said, because together with the new hotel, it will help to pull the focus of the downtown core further west to what is now the city's Entertainment District.
When the building is completed in 2009, Mr. Sullivan said it will accommodate about 6,000 office workers.
The scale of the new tower sends an important signal about the health of the market, real estate experts said yesterday.
"This really speaks to the confidence that we are seeing in the business community and the development community," said Paul Morse, senior vice-president of leasing at Cushman & Wakefield LePage.
New office stock is key to the continued health of Toronto's downtown, Mr. Morse said, and is essential to keeping the country competitive.
"It's very important for the country for Toronto to remain a centre for business," he said. "In order to attract global organizations it has to have a stock of modern, efficient buildings."
Sandy McNair, president of InSite Real Estate Information System Inc., a Toronto firm that provides market statistics to the industry across Canada, agreed.
"This is a significant milestone in the city's evolution and it is significant in the Canadian scene -- 1.2-million-square-foot buildings are very special."
RBC has leased about one-third of the new building for bank staff and as the Canadian headquarters for RBC Dexia, a unit that's a custodian of assets held by companies and investors.
The new building is likely the first of two or three projects expected in the downtown core this year, and ends a 14-year hiatus in major downtown office construction. Other projects in the planning stages are a tower by the Air Canada Centre and a revised mix-used development on the site of the long-dormant Bay-Adelaide Centre.
The leasing deal with RBC comes after six months of stiff competition for tenants among the rival projects all vying to be first off the mark.
"We are first and that's huge," Mr. Sullivan said yesterday. Along with bragging rights, being first to announce gives Cadillac Fairview an advantage when it approaches the other tenants it needs to fill the close to 800,000 square feet of remaining space.
Mr. Sullivan said the new tower has a head start over existing stock because it offers tenants more flexibility in floor design and new technology.
That competitive edge was the main reason Cadillac Fairview secured the site for the building near Roy Thomson Hall about two years ago.
It realized sooner or later the market would be ready for new office construction, and when it was, Cadillac Fairview needed to have a building in order to stay competitive and hold onto its existing tenants, he said.
Ray Wong, head of research at CB Richard Ellis in Canada, forecast that the new tower will push vacancy rates for prime office space up to 6.8 per cent in 2009 from 4.7 per cent in 2008.
If all three planned projects go ahead, he forecast vacancy rates would hit about 10.5 per cent by 2010.
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TORONTO STAR
RBC anchors new office tower
2,500 staff moving to site beside Ritz
City's first major project in 15 years
Mar. 28, 2006. 06:15 AM
TONY WONG, BUSINESS REPORTER
Since his search for new office space in downtown Toronto began about 18 months ago, there has likely been no more prized real estate client than José Placido.
The CEO of RBC Dexia Investor Services, along with RBC Financial Group, yesterday announced they have signed on to become anchor tenants in a downtown Toronto project, thereby assuring the launch of the first major office tower in the city's core in 15 years.
"We are tremendously excited," Placido said in an interview. "We have been looking for some time, but there just hasn't been space available in existing buildings."
RBC Dexia's 1,400 Toronto employees will be able to share one roof, instead of the three buildings they now occupy, when the 43-storey, 1.2-million-square-foot RBC Centre opens in 2009 at Simcoe and Wellington Sts. beside the Ritz-Carlton hotel and condominium project. Construction of the tower is slated to start in July.
The company, which acts as a custodian and administrator for large investors such as pension and mutual funds, has experienced a major growth spurt because of the booming economy, Placido said.
"Business has been very good and we simply needed more space," he said.
The possibility of having tea at the Ritz might not have sealed the deal — but it sure sweetened it. "It's certainly an ancillary benefit if clients come into town and you need to entertain them," Placido noted.
In the race to build the first major office tower in downtown Toronto in more than a decade, Cadillac Fairview Corp. has scored a major coup.
"We are delighted to have the largest bank in Canada as our lead tenant, and it says something about the quality of the project," John Sullivan, senior vice-president of development for Cadillac, said in an interview.
"The building of the Ritz was a huge plus in landing RBC," Sullivan said. "It speaks to the fact that the project will be very quality-oriented and it has been a huge competitive advantage when we have been marketing the site."
About 2,500 employees will make the move as RBC and RBC Dexia will lease 410,000 square feet for 15 years. Dexia will take more than half the space. Over the past 18 months the company's global employment has reached close to 4,000, up almost 15 per cent.
The two sides first started talking last fall and the deal was signed on Tuesday, Sullivan said.
The last major tower built in the downtown core was BCE Place, at Bay and Wellington Sts., in 1992.
The tech crash at the end of the millennium has left Toronto landlords struggling to fill buildings. While condominiums were being merrily pumped out by developers, the office market — largely seen as a symbol of the economic fortunes of the city — has been moribund.
"This is great news for the city since there is a real demand for space out there," said Ray Wong, vice-president of national research for CB Richard Ellis. "Being first out of the gate also allows Cadillac to market the space more aggressively to other tenants."
Brookfield Properties Corp. and Menkes Developments Inc. have also been close to finding lead tenants, according to sources.
Brookfield has the Bay-Adelaide Centre, which was shelved more than a decade ago and Menkes has a project near the Air Canada Centre.
The RBC announcement puts pressure on the two developers since analysts say the market can likely sustain another major tower, but three is questionable.
"We were certainly feeling the pressure to get this building going and it is a tremendous plus to be first since it shows that we are serious about building," said Sullivan.
While the Bay-Adelaide Centre is on prime land in the financial district, and the Menkes project is beside a national sports complex, the Cadillac project sits in the city's entertainment district.
Cadillac along with Graywood Developments is building the five-star hotel beside the office tower. The developers will win in another big way, since costs and timelines can be cut substantially by building the hotel and office towers together.
Pat Baker, CEO of Baker Real Estate Corp., the sales agent for the Ritz, said the announcement has created a buzz.
"This will have a huge impact since there are great synergies between the two buildings," she said. "We already have had inquiries from two very high-end retailers about locating in the area."
