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
dmacaskill@lennard.com
80-82 Power Street, Toronto

Q Market Investment Commentary Q4 2016

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