How Toronto’s retail real estate is faring in the new year

What we see in this quarter is a return of some of the larger players in our market. This is a good opportunity for private investors who may be sitting on some cash to take the risk and jump in now while the investment pool is not being hogged by the big players. In this quick review, here’s how the respective sectors fared over the past three months.

Keeping with the distress sale theme, we turn to 263 Adelaide St. W., acquired by Lanterra Developments from the courts for $69 million. The 0.335-acre site was approved for a 47-storey, 347,147-square-foot development. Based upon the approved development, the selling price provides for a value of $199 per square foot. 

Freed Developments purchased an assembly of properties from various owners which includes 224, 230, 236 and 240 Adelaide St. W. for a total land area of 0.300 acres. The selling price was $67 million.  At the time of writing, no development application for the site had been submitted. 

John Nelson Holdings Inc. and Camwood Properties Ltd. sold their properties at 241 Richmond St. W. and 137 John St. to Tridel for $59 million. In return for this consideration, Tridel received 0.431 acres of land. No application for development has been submitted at this time. 

The Well development on the former Globe and Mail site at Front Street and Spadina Avenue sees RioCan selling the air rights for  residential rental development above the  commercial development of this mixed-use site. Two towers of 16 storeys each with a total development of 339,451 square feet was approved in 2019, resulting in a value of $170 per square foot buildable. The purchaser was Woodburne Capital Management and the offering pertains to parcels A and B of the development. 

Our last high dollar sale is also a distress  sale and is part of a two-building portfolio acquired by MEC or Mountain Equipment Coop, the sole occupant in each of the  properties. The sales were necessitated when MEC became insolvent in September. The company was subsequently sold to U.S.-based private equity firm Kingswood Capital Management.

The first property was located at 784 Sheppard Ave. E. and sold for $11,400,000 or $298 per square foot. The building measures 38,200 square feet. The  second transaction occurred at 1040 Brant St. and 1428, 1430 Leighland Rd. in  Burlington. This property was improved with  a 22,950-square-foot building, selling for $4,800,000 or $209 per square foot. Both stores continue to be occupied by MEC at the time of writing.  

With our distress sales out of the way, we report Mac’s Convenience Stores Inc. milking the last dollar out of 241 Church St., selling the 0.333-acre site to Graywood for $73 million. At the time of writing, no development application had  been submitted for the site. 

Closing Remarks

This quarter felt like a walk down memory lane, reminders of days of old with a robust commercial real estate market. Is this an adaption to the pandemic and that we’ve learned to live with it or is the approval of vaccines the panacea the market needed to go kick tires again? 

Inasmuch as we saw a bull market in this and the third quarters, is it still too soon to be jumping in? Lockdowns continue, you’re eating in the basement of your home to pretend that you’re out at a new, trendy restaurant and, by the way, your home office attire actually does need to be washed from time to time.  

There is an imaginary fence that exists at this time. Those sitting on one side are happy to count their pennies and watch from the  sidelines while the other side is aggressively  investing. This writer predicts that the momentum will continue into 2021 as there is a growing comfort that the sky isn’t falling. That can all change if lenders pack up and leave town but there is nothing showing that this in fact is happening or about to happen. Keeping in touch with your friendly banker might be your best guide of any potential correction as they literally hold the keys.  

Article exclusive to TRNTO