Scotia Plaza Sold for $1.27 Billion #Toronto #CRE

As price tags go, it’s rather impressive: $1.266 billion. That’s how much Scotiabank will be receiving in exchange for its eponymous complex. The centre at 40 King Street West has two new owners: Dundee Real Estate Investment Trust gets a two-thirds share, and H&R Real Estate Investment Trust has picked up the remaining third. That purchase includes several buildings: the 68-storey main tower, the 27-storey older Bank of Nova Scotia building next door, and several adjoining properties—over two million square feet of office space in total.

In a press release issued this afternoon Scotiabank COO Sabi Marwah announced that Scotia will remain in the building as lead tenant; they’ve signed a lease to stay on site in both the modern tower and the older for the next 13.5 years.

Original Article – Torontoist

National Real Estate Update on CBC’s Lang & O’Leary

Toronto Real Estate News – April 2012

Thousands of Federal Buildings Need Repair
Toronto Star
April 23 2012

The Rock Stars of Toronto’s Building Boom
Ottawa Citizen
April 23 2012

New CEO of BILD
Daily Commercial News
April 23 2012

You’ve Got a Target? We’re In!
Winnipeg Free Press
April 23 2012

The Week That US Industrial Took Centre Stage
CoStar Group
April 23 2012

US Clients View Canada as 51st State
Wall Street Journal
April 23 2012

Walmart Probe Could Cost Some Executives their Jobs
Reuters
April 23 2012

Sears Announces Closing of Transaction with Landlord
Canada News Wire
April 23 2012

Marriott Busy Updating Courtyards
Winnipeg Free Press
April 23 2012

Under The Radar Changes That May Burst the Housing Bubble
Macleans
April 23 2012

Land Dispute Threatens Olympic Golf Course
Globe and Mail
April 23 2012

New Plans for Century Park Throw Out Vancouver
Edmonton Journal
April 23 2012

Stage Set for Downtown Winnipeg Building
Winnipeg Free Press
April 21 2012

How Department Stores Can Stay Relevant
The Globe and Mail
April 21 2012

Experts Weigh In On GTA Transit
National Post
April 20 2012

Mattamy Homes Embraces New Urbanism
Toronto Star
April 20 2012

Ottawa Office Vacancies Expected to Rise
Ottawa Business Journal
April 20 2012

Can Sprawl Be Stopped In Ottawa
Ottawa Citizen
April 20 2012

Why a Toronto Casino is a Crapshoot
Toronto Star
April 20 2012

Workplace of the Future?

The static nature of real estate combined with the dynamic nature of technology evolution is that dichotomy that we need to deal with in office design.

Technology is changing how we work. With profiles of new “Workplace of the Future” offices designed for the Burgess Group, United Way for Southeastern Michigan and its own location in Washington, DC, SmithGroupJJR explains that it’s open and team-based, giving a new balance between “I” spaces and “We” spaces. Importantly, organizations that adopt are finding it is fundamental to their future, allowing happier employees, reduced real estate costs and competitive advantage.

To search for your new office space in Toronto try OfficeZilla!

Lease Audit – Grossing Up Operating Expenses

In the operating expense provisions of an office lease you may come across wording that allows the landlord to “gross up operating costs which vary with the use and occupancy of the rentable premises in the Centre as if the property were 97% occupied and operational.”

These costs are generally cleaning, waste removal, utilities and management fees if based on a % of operating costs. Leases allow these costs to be grossed up to a range of 95% to 100% occupancy.

On the surface, allowing the landlord to charge for more expense than they incur seems absurd. However, the concept is fair to the landlord – yes, you read that right – and fair to the tenant.
An extreme examplele to illullullustrate the point:
Assume there are two tenants in a 100,000 sq. ft. office building, Tenant A and Tenant B, who occupy 50% of the space each. The cleaning costs are $1 per sq. ft. per annum, or $100,000. Cleaning contracts allow vacancy credits to be given to the landlord if tenant(s) vacate the premises.

Now let’s say Tenant B vacates the premises for a full year, reducing cleaning costs to $50,000. Without a gross up, Tenant A would now pay 50% of $50,000, equalling $25,000, even though they are responsible for 100% of the cost. The landlord would be out of pocket $25,000. Grossing up the cleaning expense to 100% allows the landlord to recover all of its costs.

Lost in translalation
Where this concept often breaks down is in the calculations used by landlord administrative staff. We have seen situations where incorrect calculations have resulted in tenants paying more on those variable expense items than if the Centre were 100% occupied.
For example, occupancy has no bearing on labour or utilities for the lobby, elevators, outside areas, or other common areas. Even vacant leaseable premises require a minimum of heat in the winter.
A Colliers audit on a 7,000 s.f. office space in Ottawa netted a $32,000 recovery for our client. The landlord had applied gross up calculations to the utilities on vacant space. However, they had continued to cool, heat and light the vacant premises as though they were fully occupied in order to make the marketing and showing of the space more appealing.

Finally, vacant space rarely remains so for a full year and appropriate calculations are required to ensure the gross up is applied only to the time the space was vacant.

REMEDY
Have the ‘right to audit’ written into the lease agreement in order to ensure that the grossing up is done correctly. Clear, concise lease language such as the following is also essential:
“The landlord is entitled to gross up those items of operating costs which vary with the use and occupancy of the rentable premises in the Centre as if the Centre were (% rate to be negotiated) occupied and operational. For greater certainty the variable costs are cleaning and utilities. In no event shall the tenant’s proportionate share of the variable expenses be greater that would be payable if the property had been fully rented.”

For Additional Information Contact:
Frank Iannarilli
Director, Lease Audit
416.620-2876
frank.iannarilli@colliers.com

Solutia SDO Head Office, Toronto – Video Testimonial

Another great deal done with http://solutia.ca/ – Get more out of your agent and your space!

Solutia SDO is an independent management consulting firm, owned and operated by seasoned professionals. We provide our clients with the skills, expertise and services offered by large consulting firms, but with one major difference — you can expect a better return on your investment.

What’s your commercial real estate agent ever done for you?

Apple To Open flagship store in Toronto at 1 Bloor West?

Stollery’s at the southwest corner of Yonge and Bloor streets

If this is true it would really shake up the market.  How much would Apple pay for such an amazing flagship store?

Could it end up looking like the store in New York below?

Market Street revitalization pushes forward

Full article – Robyn Urback – Blog TO

Plans to update and improve Market Street — the thoroughfare that connects Front and The Esplanade on the south side of the St. Lawrence Market — continue to trudge on, though it sounds like a year-round pedestrian-only space isn’t in the cards.

When plans were first announced in 2010, it seemed as though private developer Woodcliffe Properties was working towards creating a space that would be free from vehicular traffic. Paul Oberman was the president of Woodcliffe at the time, a man well-known for his revitalization projects throughout Toronto, including the old North Toronto CPR Station / LCBO flagship store. Oberman died tragically in a plane crash in March 2011, and a movement later spawned to rename Market Street in his honour.

Videos as Recommendations – What do you think?

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News – The Reality of Toronto’s Office Market – January 2012

In reality, the opportunity to buy a AAA asset in Toronto can come up only once a decade and there are REITS out that will stretch for the deal.

Article – Scotia Plaza is up for sale.  They are hoping to achieve $1 billion and now that the teachers have the cash to spend after selling the Leafs it may happen?
Article – Dundee REIT just closed on Whiterock for $580 million
Article – This was right on the heals of their purchase for Slate Properties at $832 million

Landmark Office Building purchase:
1) Commerce Court, Toronto (2000), $618-million
Sold by CIBC to British Columbia Investment Management Corp.

2) Royal Bank Plaza, Toronto (1999), $485-million
Sold by Royal Bank to Oxford Properties and OMERS Realty Corp.

3) Bankers Hall Complex, Calgary (2000), $437-million
Sold by TrizecHahn Corporation and Calgary Financial Tower Ltd. to Gentra Canada Investments

4) Brookfield Place – TD Canada Trust Tower, Toronto (2008), $429-million (half-stake)
Sold by Brookfield Properties to OMERS Realty

5) Gulf Canada Square, Calgary (2007), $382-million
Sold by O&Y, Brookfield, CGS to Great West Life and London Life

By the numbers:
Downtown – 4.6% vacancy rate (overall) – but most tenant’s are looking for B class space in the Financial Core which sits at 3.3%

Our numbers show the opportunities for “deals” in B class office buildings are in the Yonge and Eglinton (6% vacancy) and Yonge and St. Clair markets (7.4%).  Contrary to expectations, Yonge and Sheppard is actually one of the strongest performing markets at a vacancy rate of 1.3%!

Other thoughts:
·         Since 2000, the GTA office market has averaged 2.3 million square feet of absorption annually.  This year’s absorption hit over 4.1 million square feet, higher than the 2010 annual absorption of nearly 3.4 million square feet.

·         The Downtown office market hit a 10-year high showing positive absorption of 2.1 million square feet.  In the last 10 years, absorption has repeatedly been under 2 million square feet, with the last high being in 2000, when over 3.2 million square feet was absorbed throughout the year.

·         Availability rates in the Downtown office market have continued to decline, reaching 8.0 percent at the end of the quarter. The last time the availability rate was this low was in the fourth quarter of 2008, when it was 7.5 percent.

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