Cadillac Fairview commits to $479M downtown office tower without pre-lease tenants
South Core's high demand is why building at 16 York will quickly find tenants, says CF executive
Cadillac Fairview is teaming up with the Ontario Pension Board to build an office tower in downtown Toronto, and plan to move ahead with its development without any pre-lease tenants.
The 32-storey, 879,000-square foot building is to be located at 16 York and costs $479 million, but CF and OPB announced in a press release Tuesday that the construction will commence "without any pre-leasing."
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Wayne Barwise, executive vice-president of development at Cadillac Fairview, believes if you build it, they will come.
"It's unusual for us to do this, we don't typically build on-spec," Barwise told CBC News, adding this is the first time CF has done so since 2000.
"There's a unique confluence of favourable market conditions that are very compelling."
Barwise mentions Toronto's vacancy rate of four per cent is among the lowest in the continent, and said that the South Core area, where the officer tower is to be constructed, has an even lower rate of 1.5 per cent.
He attributes that figure to the demand for space in the burgeoning South Core.
"People used to call [the area] 'south of the tracks'... at the time it was just vacant parking lots," said Barwise, adding CF came up with the term "South Core" during a building development pitch in the 2000s and that CF was behind the building of Maple Leaf Square just down the block from 16 York.
Now, he says prospective tenants are looking for an estimated total of three to five million square feet of space in the area.
"There are a number of tenants actively in the market seeking new premises," he said, adding many of CF's existing tenants are looking for more space as they continue to grow, especially one so close to the highway, transit and other downtown amenities.
He believes that the South Core's high demand is why the building at 16 York will quickly find tenants, and is also why CF is unlikely to go ahead with building without an anchor tenant in the future.
"This is not a policy shift, just a rare set of compelling market conditions," said Barwise. "It's not in our practise to do this historically, and we do not expect this to be our pattern going forward."
Barwise said construction is expected to begin on July 1 of this year and slated to open June 1, 2020.