q market investment commentary q4 2016

Your source from the street.

$5 million range acquired, largely, by private investors. What is the most interesting fact this quarter is that the high dollar trade was for a street retail property at Bloor and Yonge for $74 million and not a pension fund selling off a shopping centre in the burbs. Industrial volumes were up slightly from Q3 with 136 transactions recorded in this quarter. There were 123 in Q3. There were 17 sales in excess of $10 million, a modest increase over the Q3 which saw only 9 big dollar transactions. The high dollar sale was $88 million for a 500,000 square foot facility in Mississauga. The high rise sector saw a drop in volume where only 46 properties sold, against 58 properties selling in excess of $1 million in Q3. The level of sales volumes in this quarter was more consistent with normal activity in this sector. We count 11 properties exceeding our high dollar minimum of $10 million which is down by 7 from Q3. Although, where last quarter’s high dollar deal was only $28 million, six of our properties this quarter exceeded that number with the top dollar sale being referenced earlier for $166,050,000.

Office Sales

While Q3 had a rather significant sale for $666 million, we couldn’t top that number to end the year. The best this quarter could muster was $125,125,000 for the sale of 141 Adelaide Street West, an 187,945 square foot building providing a value of $666 per square foot for this 1973 vintage building. The purchaser was Hydro-Quebec, acquiring the property from HOOPP Realty (hopefully Hydro Quebec runs a line from La Belle Province to the building to give the tenants a break!). Although not confirmed at the time of writing, we understand from market participants that the cap rate on this deal was sub 4% with the offering attracting numerous offers. The building was virtually fully leased at the time of sale. True North Commercial REIT acquired 3650-3660 Victoria Park from Investors Group for $34 million. This Class A, suburban office building measures 154,300 square feet, resulting in a value equivalent to $220 per square foot.

Investment Market Overview

The fourth quarter of 2016 followed the trend that we have been following over the year – relatively high sales volumes albeit at the expense of high dollar trades where the number of transactions over $10 million continues to pale against the sub $5 million market. Not unusual as not all deals can play in the big leagues but, for being such an international city, one would think that trophy deals would be the order of the day. Further, of those trophy deals that are posted in this report, you will read that most continue to be acquired by local name brands. Makes one think that the next time you are having a broker bake off, the agent making the play that they know all the major foreign investors shouldn’t be the number one factor in your selection criteria (sorry to burst that bubble).

Last quarter’s major deal came from the office sector, the honour this quarter goes to the high rise residential sector for $166,050,000 for 3.852 acres of land at 215 Lakeshore Boulevard East.

Although the selling price is extraordinary, the bigger story here is the fact that the land traded in 2014 for only $60 million, providing a lift over $100 million for a two year hold. Yes, this sector continues to provide some of the best stories (storeys?) in this city. Every passing quarter we suggest that this market can’t continue to pay these numbers, only to find the next quarter surpassed the prior quarter. Seems like the late ‘80s all over again. For those born in the ‘90s, you don’t know what happened but don’t worry, as they say in real estate, it could never happen again! Looking at the results, the office sector saw an increase in volume to 60 trades, 10 more than in Q3. Only 7 of those deals exceeded $10 million in value, a rather large drop from the 14 we recorded in Q3. The high dollar trade was $125,125,000 and then we drop off a cliff from there with the next high dollar sale for only $34 million. As in the last quarter, the sales figures in the retail sector are off the charts again with 260 recorded transactions against 198 properties in Q3. There is an asterisk that has to be placed against that sales volume as close to 80 of those sales pertain to a business transaction between Imperial Oil and Couche Tard. Once you “siphon” off those trades, the volume drops down to the 180 transaction range, more in keeping with normal volumes in this sector. We note that 16 properties sold in excess of $10 million in Q4 with some of those grouped in with the Imperial Oil deal. Last quarter only saw 10 deals in excess of $10 million. So we can concede a higher volume of larger deals in this quarter although the average deal remains in the sub

Q4 | 2016

141 Adelaide Street W, Toronto

East Bayfront Rendering, Toronto


Condo office space continues to fill the pages of sales reports in this sector, representing 10 of our trades for this quarter. Pricing has always been rather robust for these units. Given the relatively high cost per square foot paid for the units, it questions whether market

rental rates can provide a decent return. If investors are buying on the basis of capital appreciation, they may also be in for a surprise as the resale market is somewhat untested for this sub sector of the office market. The words “risky investment” come to mind. For a user, it might have utility as why not pay rent to yourself? Such was the case with respect to a unit at 60 Fort York Boulevard where a dentist acquired 1,400 square feet for $1,012,000 or $ 723 per square foot. Pricing for this unit was not too dissimilar to the price paid by an investor to acquire 4,500 square feet located at 73 Richmond Street West for $3,230,000 or $718 per square foot. As we noted in past reports, moving out of the downtown core doesn’t necessarily result in much lower pricing. The sale of 2,250 square feet of space at 4789 Yonge, at Sheppard, sold for $1,425,000 or $633 per square foot. The purchaser was an investor. Maybe a bargain for investors, Rockport Group recently completed an office/commercial building at 209 Wicksteed Avenue in the Laird and Eglinton area, selling units in the $342-345 per square foot range. Units ranged from 2,967 to 3,882 square feet. To finish off this sector, we look at the high dollar per square foot trade of 20 Birch Avenue in the Summerhill and Yonge area. The property is improved with a 1,650 square foot, Victorian building converted to office. The selling price was $2,794,000 or, wait for it, $1,693 per square foot. The purchaser was a user group. Good luck at finding deals mid-town any time soon.

Adgar Canada and Montez Corporation acquired 9050 Yonge Street in Richmond Hill for $22,500,000 or $247 per square foot based upon a rentable area of 91,277 square feet. The property was 95% leased at the time of sale and was throwing off a net income of $1,552,500 per annum, resulting in a cap rate of 6.9%. Adgar has been quiet over the last few years, this acquisition marks their return on the acquisition front. Investors Group also sold 1005 Skyview Drive in Burlington to a private investor for $20,050,000 or $196 per square foot. The building measures 102,284 square feet and was 92% occupied at the time of sale with such notable tenants as Scotiabank, Deloittes and Morrison Hershfield.

We remain in Burlington for our next high dollar sale with 4281 Harvester Road selling for $16,175,000 or $238 per square foot. The property was acquired by Semtech Canada, the occupant of the building, from Fengate Capital. Semtech will continue to occupy the building. Menkes sold 25 Centurian Drive in Markham to Ben Walker Limited for $12,400,000 or $216 per square foot based on a building area of 57,400 square feet. The Ontario Federation of Labour sold their building at 15 Gervais Drive to Plazacorp for $10,350,000 or $120 per square foot based upon a rentable area of 86,000 square feet. The building was 60% leased at the time of sale and had a projected net income of $621,000 twelve month’s following the sale, providing for an anticipated 6% cap rate. Some of our readers are rather astute and have likely asked “Aren’t Plazacorp condo developers?” You are correct. Plazacorp intends to stabilize the income for holding purposes and then redevelop the site, which measures 2.71 acres and fronts on Eglinton near Don Mills, where there will soon be a new subway stop. This becomes a pretty cheap acquisition cost for 2.7 acres of land for future high rise development on a subway line.

1005 Skyview Drive, Burlington

15 Gervais Drive, Toronto

73 Richmond Street W, Toronto

20 Birch Avenue, Toronto


Staying within the banking industry, CIBC sold their corner building at 378 Queen Street West/165 Spadina Avenue to Metrus Properties and Pemberton Group for $29,895,691. The property measures 33,926 square feet, representing a value of $881 per square foot. The building’s net income was projected to be $1,176,369, providing for cap rate of 3.9%. Crombie REIT found the right prescription and purchased 3362-3370 Yonge Street from MIG Investments for $29 million. The property is improved with a 17,900 square foot , three storey building and leased to Shoppers Drug Mart. The net income on the transaction was $1,253,000, providing a 4.3% cap rate for Crombie. It is interesting to note that Shoppers entered into a new lease at the time of sale for $70 per square foot net, despite being a recent occupant to the newly constructed building 5 years prior. So we’ve reported on three major sales and all have the common theme of street retail. We can add 1230 Queen Street West to the group with the sale of approximately 25,000 square feet purchased by Metro for $16,560,000. Metro will operate a grocery store from the space located within this high rise condominium development near Queen and Dufferin.

Good news - this writer found a non-street retail high dollar sale. The property in question is 2375 Wyecroft Road in Oakville, a site occupied by Oakville Toyota. The vendor, Rafih Auto Group, made a nice $6,470,000 lift for a two year hold on this investment, having purchased it in 2014 for $10 million and selling it this quarter for $16,470,000. The purchaser was Palladino Auto Group who will continue to use the property for automotive purposes. The selling price equates to $550 per square foot based upon 29,600 square feet of space.

Retail Sales

We mentioned in our introduction that sales were off the chart in this sector although the numbers spiked due to the Imperial Oil – Couche Tard Ontario and Quebec portfolio sale. The portfolio contained 279 properties consisting of Esso branded stations and vacant land parcels with a value of $1.69 billion. If our estimate is right, 79 properties make up the GTA portion of the transaction, bringing our true sales volume down to 181 properties. Although the predominant sales were in the $3 to 5 million range, there were a number of high dollar transactions including 7015 Yonge Street for $40,834,298, 4696 Yonge for $24,394,104 and 9700 Yonge for $27,195,553. Subtracting these three transactions from our high dollar group leaves 13 transactions over $10 million in this sector.

As mentioned i n o u r o p e n i n g remarks, the honour of our high dollar trade goes to a street retail property on the Mink Mile at Yonge and Bloor. The property in

question being 17-19 Bloor Street West, owned and occupied by The Bank of Nova Scotia. This 0.20 acre site is improved with a 17,087 square foot bank building, fully occupied by Scotiabank. The selling price was $74 million equating to a value of $4,331 per square foot. The purchaser was Mappro Realty out of Belgium. It is our understanding that ScotiaBank will lease back the full building at a rental rate slightly less than market. In two years’ time they will give back 3,000 square feet of ground floor space at the corner of Balmuto Street which will subsequently be put out for lease to third party tenants at, assumed, market rents. The cap rate was in the 3.8% range.

17-19 Bloor Street W, Toronto

3366-3368 Yonge Street, Toronto

378 Queen Street W/165 Spadina Avenue, Toronto

2375 Wyecroft Road, Oakville


investment and not for their own use. Tenants included Scotiabank, Penningtons and Tim Hortons. The net income was estimated at $460,000, producing a cap rate of only 3.4%. Torgan Group sold their property at 3105-3115 Winston Churchill Boulevard in Mississauga to Tanson Properties for $12,500,000. The centre occupies 45,421 square feet resulting in a value of $275 per square foot. Occupants include Radica’s Hot and Spicy, Maryam Pharmacy, Fabutan, SukoThai and Winners Edge Bar and Grill.

Staying in Mississauga, 2111 Dunwin Drive sold for $12,150,000 or $225 per square foot. This 54,060 square foot neighbourhood centre was sold by Dunwin Holding Corporation to Youthdale Limited. Tenants included Jameson Pool and Spa, The Treadmill Factory, Tasco Appliances and Dunwin Pharmacy. Our last large sale pertains to a rather non-descript, two storey, street retail building located at 6369-6375 Yonge Street. The property is estimated to measure 5,700 square feet on two floors and sold for $12 million or $2,105 per square foot. The vendor was Gino and Eugene Investments who sold it to a private, numbered company. Tenants include Pizzaville and Sandra’s Hair. When one digs deeper, you find that this p u r c h a s e r h a s assembled the whole block save for one property, so there is more to this story t h a n j u s t a n o v e r p r i c e d acquisition of a past its “best before” d a t e ” r e t a i l investment. For fun this quarter, we will examine Bloor West Village as trading tends to be fairly light along this corridor as, in the past, many of the owners along this stretch were owner/users. As national tenants have moved in, rents have gone up and the chance to take the money and run is too good to be true. Many of these owners are now grandparents, if not great grandparents, providing them the “pension” they deserve for years of service.

Bad news – we left street retail and now we’re doing car dealerships, if this was cards, we would have had a full house! It would appear that Rafih Auto Group sold their Toyota dealership to purchase 190-200 Canam Crescent in Brampton. This property is improved with a 37,000 square foot Chrysler, Jeep Ram dealership. The selling price was $16 million or $425 per square foot. Rahih intend to continue to utilize the property as a dealership. Back to street retail, KingSett sold their holding at 81 Yorkville Avenue and 26 Bellair Street to ProWinko Canada, an active investor in this node having purchased 1200 Bay Street earlier in the year and they also acquired other Yorkville street retail over the past 12 months. The building measures 12,700 square feet and sold for $15,500,000 or $1,220 per square foot. Tenants include Dove Cleaners, Uncle Otis, Ebillion and Violet Blonde. Medcap Realty sold 25 Kings Cross Road in Brampton to a private investor for $14 million. Offering 77,662 square feet of space, the selling price is a relatively cheap $180 per square foot. The centre was fully leased at the time of sale and produced a net income of $1,193,676 providing a cap rate of 8.53%, double what we’re normally used to these days. Tenants included Regency Fitness, Peel District School Board, King Cross Super Market and Physiomed.

The New World Plaza, located at 3 6 0 0 - 3 6 4 0 Victoria Park Avenue sold for $13,980,000 or $241 per square foot, based upon 58,100 square feet of rentable area. This was a trade between

private investors with Farne Properties acting as vendor and J-One Ontario Inc. as purchaser. Major tenants include HSBC, Dream Wedding, ABC Bakery Coffee Shop and Crown Prince Fine Dining and Banquet. The Bank of Nova Scotia, who have been actively selling assets as of late, sold their holding at 7681 Yonge Street for $13,500,000 or $818 per square foot given an area of 16,501 square feet. The purchaser was Re/Max Realtron who appear to have purchased the property as an

2111 Dunwin Drive, Mississauga


81 Yorkville Avenue, Toronto

3600-3640 Victoria Park Avenue, Toronto


So we knock off $55 million to report on our next deal, 1590 South Gateway Road in Mississauga. This 195,322 square foot, single tenant building sold for $23,750,000 or $122 per square foot. The building was leased to Revlon on a lease expiring in 2021 at a current rate of $1,246,000 per annum providing a yield of 5.25% and sold to the Insurance Corporation of British Columbia who purchased the property from KingSett. It would appear that this building only required “cosmetic” repairs at the time of sale. Our next trade is a non-arms length transaction for the property at 4151 North Service Road in Burlington. Concert Properties vended the building into a new, owned company 4151 North Service Road Burlington Holdings for $23,168,855 or $110 per square foot. The building measures 209,095 square feet. The building was fully occupied by SPX Flow at the time of sale. In a similar vein, Concert Properties also moved a number of other holdings on the same date, including 6625 Tomken Road in Mississauga. This multi-tenant facility, measuring 335,100 square feet, sold for $17,964,253 or $55 per square foot. 75 Rexdale Boulevard, a 320,747 square foot, multi-tenant building was sold for $15,048,954 or $47 per square foot. 2495 Meadowpine Boulevard in Mississauga, a multi-tenant, 53,750 square foot building was moved over to a new holding company for a price of $8,797,122 or $165 per square foot while 80-90 Centurian Drive in Markham traded for $9,536,114 or $72 per square foot based on 132,826 square feet.

Lotus Pacific Holdings sold 1170 Invicta Drive in Oakville to Chemvest Holdings for $20,245,000. The building has a rentable area of 190,879 square feet, offering a value of

$106 per square foot. The building was 80% leased at the time of sale and it is our understanding that the new owner will occupy space in the facility.

In Bloor West Village, National Trust, acting on behalf of CIBC, sold to Metrus Properties and Pemberton Group 2219 Bloor Street West. The site is improved with a CIBC branch measuring 6,138 square feet on two floors. The selling price was $4,138,425 or $674 per square foot. CIBC is leasing back the building at

a rental of $163,384, offering a 3.95% return to the purchaser. Re/Max West Realty purchased 2234 Bloor Street West for $2 million from a private investor. The building measure 2,300 square feet over two floors, equalling a value of $830 per square foot. Re/Max was the occupant on the building at the time of sale and will continue to occupy the space moving forward. Lastly, 2315 Bloor Street West sold for $2,075,000 with a building measuring 2,250 square feet on two floors. The price equates to $922 per square foot. The vendor was a private, numbered company and the purchaser was a private investor. The property was fully leased at the time of sale with tenants including Bloom Restaurant at grade and Ohana Wellness upstairs. The income was estimated at $99,600, providing a return of 4.8%.

Industrial Sales

Industrial sales volumes are up slightly this quarter to 136 trades and there was a rally in high dollar sales with 17 transactions exceeding $10 million versus only 9 last quarter. Our high dollar sale was $88,250,000 in exchange for 502,250 square feet of space at 3755 Laird Road in Mississauga. The selling price provides for a value of $175 per square foot. The property was owned by The Erin Mills Development Corporation and sold to GWL Realty Advisors. The site is improved with three, multi-tenant buildings. This is a newly built facility that was 98% leased at the time of sale. The going in cap rate was 4.75%. GWL have significant holdings in the neighbourhood, making it a natural fit for acquisition. Unit sizes ranged from 6,000 to 25,000 square feet with 22’ ceilings. Low by today’s standards but adequate for the intended use.

2219 Bloor Street W, Toronto

2315 Bloor Street W, Toronto

1590 South Gateway Road, Mississauga

6625 Tomken Road, Mississauga

1170 Invicta Drive, Oakville


Crown Realty Partners made a nice $6 million lift on the sale of 335 Britannia Road East in Mississauga over a two year hold. Menkes acquired this multi-tenant building for $18,366,500 or $90 per square foot based on 207,449 square feet of space. The building had over 80,000 square feet of office space within its walls, about 40% of the building versus the norm of 10%. Tenants include Rexall, Sharp and WIS International. The occupancy level was 87% at the time of sale. Quik X Transportation sold 6767 Davand Drive in Mississauga to Rathcliffe Properties for $18,050,000. The building measures 66,265 square feet on a land area of

12.11 acres. It was indicated in the sale report that there was 10.78 acres of excess land that made up the offering. Using a land value just over $900,000 per acre, results in a building value of $8,283,120, adjusting our value to $125 per square foot.

Keeping with our $18 million theme, 33 Green Belt Drive in North York, sold for $18 million or $127 per square foot. The site was improved with a 142,000 square foot building. The vendor was Grand and Toy who leased back the building for an 8 month term at a rent of $710,000, providing a return of 3.94%. The purchaser was OTT Financial. Panattoni and Greystone Managed Investments combined forces to acquire 7510 Bren Road in Mississauga for $17,200,000 or $85 per square foot. This 201,104 square foot building was owned by Lotus Pacific Holdings. At the time of sale, the building was completely vacant. Dream Industrial REIT sold 5900 Finch Avenue East to Soneill International for $13,265,000 or $80 per square foot. The property measures 166,751 square feet and was 93% leased to five tenants. The net income at the time of sale was $862,225, offering a return of 6.5%. KingSett acquired 1602 Tricont Avenue from Sony of Canada for $13 million. The property has a rentable area of 227,000 square feet. A price of $57 per square foot results. It should be noted that the site measures 36 acres, providing for significant development potential. At the selling price, the building would be considered free in the transaction as the $13 million price equates to only

$360,000 per acre. Sony will vacate the property in May, 2017. Tallman Truck Centre Limited acquired 7450 Torbram Road for their own use. The property is improved with a building only measuring 36,700 square feet on 7.39 acres of land. The selling price was $11,600,000. It was estimated that 6.57 acres of excess land ran with the sale. At a value of just over $1 million per acre, the adjusted sale price for the building was $4,770,000 or $130 per square foot. Tallman had been the sole tenant on the property prior to acquisition from KSP Holdings. We have two transactions trading for $11,500,000. The first is 255 Orenda Road in Brampton being purchased by a private investor intending to use the vacant building measuring 168,000 square feet for a value of $68 per square foot. This is an older vintage industrial building with a 16’ ceiling height.

The other trade for $11,500,000 was a partial, user acquisition by Weins Canada from Bruce N. Huntley Contracting. The property is located at 205 Torbay Road in Markham, measuring

98,750 square feet or $116 per square foot. The building is multi-tenanted with the purchaser utilizing some existing vacant space within the facility. Lastly we examine 1865 Birchmount Road in Scarborough. This 176,000 square foot, single tenant building sold for $10,650,000 or $61 per square foot. The purchaser was D-Mak Property Management, acquiring the asset from a numbered company. The site area is 10.02 acres, suggesting excess land for expansion or future re-development on this site improved with a 1959 vintage building.

High Density Residential Land Sales

Our number of high dollar trades is cut in half this quarter with only 9 transactions exceeding $10 million out of 46 total sales in this sector. What is interesting to note is that, despite 18 high dollar trades in Q3, the highest dollar sale was only $28 million. That would place number 7 in this quarter. So we would conclude that, in this quarter, size matters.

6767 Davand Drive, Mississauga

5900 Finch Avenue E. Toronto

7450 Torbram Road, Mississauga

205 Torbay Road, Markham


HUGE – the only word to describe this quarter’s highest dollar trade. The sale of 215 Lake Shore Boulevard East to Greenland Group from Greybrook Realty Partners, Castlepoint Investments and Cityzen Development Group for $166,050,000 sees the vendor receive a lift of over $100 million for a two year hold. The vendor acquired this 3.852 acre property for $60 million in 2014. The site was originally envisioned to contain 1.8 million square feet of development with 180,000 square feet of commercial space. No development approvals could be located at the time of writing. We knock $100 million off for our next transaction, the sale of 480-492 Yonge Street for $67 million. KingSett had assembled this 0.453 acre site over the last 5 years paying around $20,500,000 for the assembled properties. Cresford Developments were the purchaser. Cresford anticipate building 349,879 square feet of development on

the site, providing for a value equivalent to $191 per square foot. Earlier this year we remarked that the development at 1 Bloor West, that was assembled for a similar price per buildable, was totally outrageous and likely unprofitable. It would appear that Mizrahi Developments, the purchaser of 1 Bloor West was just setting the bar for future developments south of Bloor.

Given the price paid for 215 Lake Shore Boulevard East, the sale of 351-369 Lake Shore Boulevard East for only $58 million might seem a bargain. Manulife sold this 5.149 acre site to Great Gulf and Dream Unlimited. The site was improved with the Victory Soya Mills Silos, buildings that are listed on the Heritage Registry, suggesting the new owners might have to work around the structures. Plans are to develop one million square feet of mixed use residential and commercial space. The Mountain Equipment Co-operative building at 400-420 King Street West has sold. This was a much anticipated offering as Mountain Equipment had announced a relocation to a new facility on Queen Street West about a year prior. This 0.654 acre site improved with Mountain Equipment’s retail store, sold for $50,511,000 to Plazacorp Investments. At the time of writing, no redevelopment applications have been tendered. Mountain Equipment’s

new location on Queen was not under construction at the time of sale, suggesting they have taken a short term leaseback on King Street.

A landmark property, owned by high end food market Pusateri’s, at 1539-1541 Avenue Road, north of Lawrence, sold for $46,779,000. The purchaser was First Capital Realty who, in addition of acquiring

this 1.016 acre property, also purchased 284 Lawrence Avenue West and 288 Lawrence Avenue West from Pusateri’s for $1,857,000 and $2,224,000, respectively. They also acquired 1537 Avenue Road, improved with a car wash, also owned by Pusateri’s for $12,140,000, a site measuring 0.773 acres. In total, First Capital have invested $63 million in return for 2.177 acres of land. No application for development had been made at the time of writing. Diamante Development purchased 1926 Lake Shore Boulevard West from Carterra for $40 million. This 1.105 acre site was approved for development of 622,423 square feet contained within two 35 storey towers connected by a 5 storey podium. Based on the selling price, the development site cost $64 per square foot buildable. Fernbrook Homes and Cityzen Development sold 45 Strachan Avenue to Bentall Kennedy for $26,611,150. The site measures 0.663 acres and was approved for 355,073 square feet of development within a 39 storey tower with ground floor retail and a 4 to 6 storey podium. The development has a value of $75 per square foot buildable. ADI Development Group purchased 64 Prince Arthur Avenue for $17,750,000. This 0.301 acre site was improved with a two storey office building at the time of sale, owned by a private investor. Although no plans for redevelopment have been submitted, the purchaser intends to construct a 17 storey luxury condominium on site with only 37 units. Assemblies continue to transpire. We note Manga Hotels Group acquiring 207-219 Jarvis Street in 7 separate transactions, all owned by PJZ Investments. The total site area is 0.42 acres and Manga has paid $10,500,000 for the assembly. Manga has submitted a development application to construct a 35 storey mixed-use tower with 242 hotel units and 227 residential units.


400-420 King Street W, Toronto

1537 Avenue Road, Toronto

45 Strachan Avenue, Toronto


On another note, this writer gets asked quite often to search out neighbourhoods that may be off the radar to other participants, asking to find the next emerging market. It would appear that there’s not many markets left to exploit. It’s too late for Dupont, far too much going on there, College is long gone, the forgotten east end of the city is congested with cranes and those cranes are crossing the Don Valley River into Leslieville. Kingston Road, dotted with hotels rented by the hour, is now becoming home to mid-rise condominium development. In the west, the Junction is finally getting its 15 minutes of fame while older Queensway industrial plants are being replaced by high rise condos for millennials. It’s just getting really weird out there. Neighbourhoods where you’d wouldn’t step outside the safety of your car a few years ago are now overpriced, cool and your kids want to live there. Actually that’s good news for the city and its residents as you feel safe where you walk. But we’re running out of places for artists to live and sell their wares. In fact, if you want to find the next emerging market, look for where you see small art studios opening up as they’re the first to move in for cheap rents and the first to leave as others flock to their awesome neighbourhood.

Further east, an assembly on Power Street, in the Parliament and Queen Street area, is underway by a private investor. To date they have acquired 80,-82, 90, 92 and 94 Power Street. The lots combine to provide 0.355 acres of land with an investment of $12,200,000.

Closing Observations

The train keeps chugging along at full speed with no stops in sight. Sales volumes this past quarter exceeded Q3, one of the better quarters on record. We also recorded far more high dollar deals in all sectors than we did three months prior. So here’s an interesting observation that is counter to the “list it and they will come” theme of our market. This writer began saving broker listings about 6 months ago. This file is 5 inches thick (apologies to those on metric, you’re dealing with an old school writer). Please note, these are not MLS listings, which have historically been overpriced properties listed at prices that were vendor mandated. No, these are listings from Colliers, CBRE, Cushman and Wakefield and Avison Young. Companies that would do the analysis up front to arrive at an asking price that should move this product off the shelf. Yet, with only some exceptions, most of these properties remain for sale. Can any of our subscribers explain why these properties don’t sell while virtually any property with a hint of being available attracts, say, 10 offers? Just to assist, many of these properties are industrial buildings, not exceeding 100,000 square feet. Most are vacant but they are NOT 60 year old buildings with a 12’ ceiling height. Others are street retail buildings while there are quite a few residential in-fill sites that populate the list. Week after week we receive follow up broker letters asking for assistance in the sale of the property. Yet, we write our report and discuss $1,000 per square foot office trades, $2,000 per square foot retail trades, $200 per square foot industrial trades and $200 per square foot buildable condo sites while most of these listings don’t come close to those pricing levels. It is quite a conundrum.

Contact Information

Thank you for subscribing to The Q™ Investment Report. For more information, please contact:

Dean Macaskill

Senior Vice President | Investment Sales

Lennard Commercial Realty, Brokerage

1900-150 York Street

Toronto Ontario M5H 3S5

416.649.5945

[email protected]

80-82 Power Street, Toronto

q market investment commentary q4 2016

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