iQ Offices’ 302 Bay, a historic 14-storey heritage building in the heart of downtown Toronto’s Financial District, is now fully open.
The almost 60,000 square feet of space in a former Bank of Montreal building was modelled after The Ned City of London, a private members’ club and hotel in the former Midland Bank headquarters in the United Kingdom’s capital city. iQ is sub-leasing 302 Bay from BMO and has a 20-plus-year lease.
It was a complex process to take the interior and its small floor plates down to the studs, while still preserving the historic elements, then incorporate hospitality-grade design to offer boutique hotel style and service to meet the evolving needs of today’s employers and employees.
iQ was responsible for all of the demolition, construction and revitalization work. Company co-founder and chief executive officer Kane Willmott said the project ended up taking the better part of two years and costing about $330 per square foot.
“We actually opened it in phases,” Willmott told RENX. “We did the first seven floors, which we opened on February 1, and then we did two floors per month for the next four months.”
302 Bay’s features
The 108-year-old building, on Bay Street between King and Adelaide, features a four-floor amenity program and includes:
six wellness rooms and a thermotherapy suite, including two cold plunges and a large cedar sauna, plus showers and towel service;
a dedicated on-site team providing personalized support;
a games room with a billiards table that converts into a boardroom table;
a full-time staffed barista bar serving hot and cold drinks;
breakout areas;
kitchens on every floor;
a south-facing rooftop terrace with skyline views;
weekly happy hours with complimentary snacks and beverages;
nine bookable meeting rooms;
phone booths, enterprise-grade connectivity and printing stations;
and direct access to Toronto’s indoor PATH pedestrian system.
“Since COVID, employers aren’t competing from one office space to another office space,” Willmott said. “They’re competing with the comforts of home.”
Employers therefore have to entice people to come into the office by providing an enjoyable experience and environment that will offset the pains of commuting and other hassles.
iQ is in Toronto, Montreal, Vancouver and Ottawa
iQ launched in 2012 and has become the country’s largest Canadian-owned, and third largest overall, co-working operator. It now has five Toronto locations as well as one each in Montreal, Vancouver and Ottawa.
A view of the lounge area at iQ Offices’ new downtown Toronto Bay Street location. (Courtesy iQ Offices)
“We have visual and audible privacy,” Willmott said of some of the elements that are consistent across all locations, which also include members-only lounges and high staff-to-member ratios.
“We have technology set up with private VLANs (virtual local area networks) so that companies are protected, from a technology perspective, from other companies within the space.”
Each space, however, also retains a unique identity and atmosphere that’s in line with the building it’s in and its location.
“What we position ourselves for is the enterprise customer and larger organizations that have compliance requirements and are looking at catering to the unique needs of the people who are in the markets that we’re in,” Willmott explained.
“How do they attract and retain the best talent and have a space that’s reflective of their brand in terms of the quality of the experience when people are on site?”
Large organizations are driving co-working growth
Many industries work faster than real estate, and the needs and wants of office occupiers can move quickly when it comes to how and where they deploy their resources.
Since things have returned closer to normal after the COVID-19 pandemic, Willmott said many large companies now have mandates to have portions of their real estate in service office spaces, like those provided by iQ, where they have 50 employees or less.
“They’re looking for flexibility so they don’t end up getting locked into a long-term contract where they’re having to pay for space that they’re not using,” Willmott said. He added that these companies don’t want to assume the costs and responsibilities for building out and operating a space when they don’t have to.
“These large organizations are recognizing that they need to focus on their core business, and they’re able to outsource to us everything to do with the workspace. And they’re agile.
“So as their head count changes, as their work styles change and as their priorities change, they can have workspace that will move at the same speed as their decision-making.”
Startups aren’t iQ’s primary customers
Companies with billion-dollar valuations are leading the charge in these moves to co-working spaces in markets where they don’t have head offices, according to Willmott. He has noticed many small and medium-sized organizations are now seeking more traditional office space where rents may be lower but they’re not getting an all-inclusive solution.
“The startup community is not our customer,” said Willmott, who acknowledges that goes against the perception many people have of co-working companies and spaces.
iQ’s leases are generally 12 months, but can range from six months to three years, depending on the user and its decision cycle.
“Companies are recognizing that the best chance they have of getting people into the office and using the workspace investment as a driver for growth, and getting that return, is to outsource to a group like us,” Willmott said.
Business is good for iQ now and Willmott believes current trends will continue. He expects that in the future, more companies will consider workspaces as a service that can drive returns and demand shorter and more flexible lease terms.
While there’s nothing to announce at this point, Willmott said iQ is looking at expanding in its current markets and considering moves into other Canadian cities as well.
Real estate investors are expressing cautious optimism for the latter half of 2025, despite lingering headwinds that remain concerning for industry professionals.
According to a new study, the vast majority of Avison Young real estate professionals surveyed are convinced overall investment activity will stay the same (48 per cent) or improve (45 per cent) for the rest of this year.
“Very few of the respondents anticipate a decline in activity in the market. A lot of the uncertainty from the beginning of the year has dissipated slightly: things will not be as bad as maybe we were anticipating and there’s also some long-term fundamental trends that are not even related to tariffs,” said Marie-France Benoit, principal and director market intelligence Canada with Avison Young, who spoke with RENX.
“What we’re seeing is that people were ready to get back in the game.”
The survey was conducted online, and it included follow-up questions, between May 13 and May 26. It included responses from 150 Avison Young employees (brokers and project management professionals) across Canada.
After a pause, investment activity returns
While U.S. tariffs were heavily cited as a reason for pessimism, with 67 per cent of respondents saying their markets would suffer due to the extra costs, some uncertainty from earlier in the year may now be behind us.
“Almost all of the institutions were telling us that they’ve gotten through a lot of their issues with loans that had to come due, and all the things that were eating up their capital, and they were looking forward to getting back to investing in 2025,” said Mark Fieder, Avison Young principal and president for Canada, who also took part in the interview.
“What’s happening here is that we had a pause but we’re getting back to where we were going into the end of last year, when we had this optimism. I think that you’re going to see more activity toward the end of the year.”
The main reasons for a potential pause in investment activity, according to the survey, include tariffs and overall costs (34 per cent), feasibility (24 per cent) and risk (21 per cent).
In contrast, 88 per cent of respondents (44 per cent significantly; 44 per cent slightly) believed there will be an increased demand for investment in the final six months of 2025.
“If you look at the fundamentals of the market and the economy, it’s pretty solid. We have relatively low unemployment; we have relatively low interest rates, and construction costs are starting to come down. We know there’s some tariff concerns around materials but, overall, things are starting to come into balance,” Fieder observed.
CRE investment “solid across the board”
While U.S. tariffs continue to be a source of market apprehension, investment activity looks to improve in many sectors, he said.
“Going into the back half of last year, we see demand for industrial both on the occupier (and) the investor side. We see demand for retail on occupier and investor, and we see demand for multiresidential both on the occupier and the investor side.
“It’s solid right across the board in all six major markets in Canada and many of our sub-markets as well.”
What is giving some real estate professionals a great deal of confidence are efforts being made to transfer foreign investment and business ties away from the U.S. to other international markets.
“I also think that it’s becoming apparent to me and others, that the tariffs are not going to be as punitive as what we thought they would be,” Fieder said.
Infrastructure bill addresses major need
As well, new legislation in the form of Bill C-5 represents good news for the industry, according to Benoit.
“Infrastructure has been an issue for real estate, because of the aging infrastructure. The recent announcements to have speedier investment in infrastructure is good news because, good new leadership wants to address something that real estate has had to address as well.”
While companies increasingly are pushing employees to return to the office, after COVID and post-COVID downturns in office capacity, many commercial real estate professionals are being challenged to successfully place clients into appropriate office spaces.
This could boost that sector in the coming months.
“Workplace strategy will be brought to the table,” Fieder said. “One of the things that’s happening right now, is some of our big institutions, including the banks, are bringing people back, return-to-office, and they’re making rules for three days, and in some cases, four days; some cases five days. They’re realizing they don’t have enough space and the space that they have may not satisfy their employees, meaning that some employees don’t want to come back into some environments.”
Overall, investment demand remains strong for most asset classes, according to the survey.
“The multires remains one of investors’ favourites. There’s strong demand in food-anchored retail malls and also interest in specialty real estate, like data centres and self-storage,” Benoit concluded.
The boom times have ended, and industrial real estate owners and tenants across Ontario’s industrial heartland are in wait-and-see mode as vacancy rises and downward pressure increases on leasing rates.
The immediate question is how far the slowdown might go. But the mood was far from sombre during a deep dive into the industrial sector Thursday at the Southwestern Ontario Real Estate Forum at London’s RBC Place.
The region stretching south and west beyond the Greater Toronto Area has experienced record growth and leasing rate increases in recent years, so this levelling off was expected. Ongoing deliveries of modern, new space and uncertainty about the economy due to the trade war initiated by U.S. president Donald Trump are key contributors to the leasing pullback.
As an example, the Kitchener-Waterloo area has received “historic levels” of new space in the past few years. About half of that six million square feet (in a market of 65 million square feet) is now vacant, Colliers’ Southwest Ontario brokerage president Chris Kirwin said.
Other centres across the region have seen varying, but similar growth in their industrial inventories. Time is needed for that to be absorbed.
“Once we’ve got that fully absorbed and we are back to a normalized market, we can see growth again,” Ben Haythornthwaite, director of market analytics for the Greater Toronto Area at CoStar, said during the discussion.
Near future for industrial development land
He predicted that could take a year to 18 months, though in the meantime companies holding industrial development land could face some tough decisions – hold or try to sell, especially if they were planning to develop it quickly.
“For me it comes down to whether you are holding debt with your land,” he said. “If you are holding debt then it’s a very expensive thing to own. I think that is the big differentiator.”
On the leasing front, both Kimberley Hill of Toronto-based Dream Industrial, and Sean Ford of Dancor, which is headquartered in Brampton, said touring activity remains steady despite the new conditions. Both firms have significant holdings across the region.
“The competition is steep,” said Hill, Dream Industrial’s senior vice-president of customer solutions. She said potential tenants can now tour several properties rather than having to scramble to meet their space needs.
“We’re finding tenants are getting way more sophisticated. They know the market, they know what they want, they’re asking an awful lot more questions.”
“Pressure” on industrial leasing rates
They’re also asking for better rates and incentives.
“I think there is pressure on rates but I don’t think they are dropping significantly,” Hill said.
Ford echoed that thought: “We’ve seen rates come down, but deals are getting done.”
Tenants also know the balance of power has shifted in their favour. “They do know they have more control now. I think that’s a trend that’s not going to go away.”
JLL’s Q1 2025 stats show vacancy at 5.2 per cent and just under 2.5 million square feet being developed across SW Ontario. Colliers’ Q1 report cites 1.5 million square feet of absorption across the region over the previous 12 months.
The market is also somewhat bifurcated. While larger properties are seeing less leasing action, smaller industrial facilities are still in demand.
“We see that local deals on a smaller scale, under 50,000 (square feet), are happening just as they were last year and the year before,” Ford observed. “But, larger deals 150,000 (square feet) or more and . . . anybody that has got an American connection is going to wait and see what is going to happen.”
Dancor did just deliver a 660,000-square-foot distribution facility on Scanlan St., in London to retailer Gap Inc., but that deal was signed over a year ago. Offering 48-foot clear heights, it’s part of an industrial area along the Veteran’s Memorial Parkway corridor leading to Highway 401.
“It kind of tells you London has arrived to build a building like this,” he said.
Dancor intends to keep its development land
He also said Dancor is going to keep its development land, and move forward with acquiring approvals so it can move quickly to develop. Spec building in the region has ceased, so he foresees a time in a year or two when space will again begin to tighten.
“We think 2026 is going to be a very good and happy year,” he said.
Another important note is that construction costs have eased in recent months. An overall slowdown in development means when someone wants to build, labour is available for the project.
“I think construction costs have really tapered off,” Hill said. “We just sent a bid out on an expansion here in London and we were surprised at how competitive everyone was … the numbers came in significantly below our budget.”
Ford suggested costs could be down as much as 10 per cent or more depending on the project and the trades involved. He said construction materials are also more readily available.
All in all both the region and the wider national industrial real estate sector remain healthy so far – despite the uncertain times.
“You can say that vacancy has quadrupled, but it’s still three per cent in a lot of the markets,” Haythornthwaite said. “If you look at Canada against other countries around the world, look at the U.S., we are about half their vacancy rate and we were growing rents about three times (the pace of) the U.S.
“Canada performed particularly well, the hottest bull run we’ve ever had in the country. So yes, we’re slowing from that but it’s far from a dead market.”
Mixed-use redevelopments, low inventory and low vacancy among factors buoying sector, despite high-profile store failures
Canada’s retail real estate has generally performed well of late and is playing a growing role in mixed-use developments to position itself for long-term success.
A panel discussion at the June 5 Land & Development conference at the Metro Toronto Convention Centre examined the sector, starting with an overview provided by moderator and Cushman & Wakefield executive managing director of retail services John Crombie.
There’s about one billion square feet of retail space across Canada. Toronto has the most in terms of square footage, though Montreal is No. 1 on a per-capita basis. Ontario is home to 50 per cent of all the country’s shopping centres, while being home to about 16 million of the country’s 40 million residents.
Canada has a retail vacancy rate of about two per cent, below the seven per cent rate in the United States.
“It’s very challenging to find good locations across Canada for retailers, and that’s why landlords are pushing rents when they can,” Crombie said. “We’re seeing, on average, renewal rates going up five to 10 per cent, depending on the market.”
Retail construction has decreased
Just under seven million square feet of new retail space is under construction, much of which involves redevelopment.
“Densification and intensification is pretty much the cornerstone of what’s going on in the marketplace, and about two-thirds of the new stuff coming on is in mixed-use developments,” Crombie said. “This is a fraction of what we’ve seen historically. Generally, you’d see 25 to 30 million square feet of new construction each and every year.”
There were 536 major retail chain store closures in Canada in 2024, and there have already been more than that so far this year.
“Bringing more space on to the market has been advantageous for retailers that want to expand and hopefully take some of these locations,” said Crombie.
“The biggest issue we have with HBC is the capital costs. A lot of the HBC locations are multi-levelled, older buildings and the capital cost outlay to try and reconfigure them – as compared to Target or Sears, which were mainly one level – is going to be very expensive.”
Lenders like retail
Debt advisory firm Balmoral Capital recently provided a $60-million loan to finance the redevelopment of the 511,000-square-foot Eastgate Square mall in Hamilton, which sits on 44 acres of land and is approved for over 1.8 million square feet for a mixed-use, transit-oriented community.
“We’re seeing this trend across enclosed malls where, over time, they’ll be transformed, revitalized and contribute to communities,” said Balmoral managing partner Dustin Greiver. “There are compelling financing structures available for retail redevelopment opportunities.”
Greiver said retail is a hot asset class and there’s a lot of competition among lenders to become involved with deals.
“It’s been an asset class that’s performed well. Absorption is strong and there’s strong conviction in the exit, which is ultimately what drives the demand from lenders.”
Intensification has slowed
“It’s a tough time from an intensification development perspective,” said Toby Wu, executive vice-president of development for QuadReal, which has 4,000 residential units under construction and 54,000 in its development pipeline. Many of those homes are slated for seven master-planned, mixed-use communities.
“As a longer-term owner, it’s about generating and preserving income in the interim while still keeping optionality on your development sites.”
Wu believes former HBC stores in good locations in large cities provide good opportunities for upgrading and making those spaces more productive. In smaller markets, however, it may take more time for new leasing or repurposing.
Retail rents are rising
“The biggest variable that’s changed, given the rise in costs, is the rent that retailers are willing to pay,” said Anton Katipunan, vice-president of development for RioCan REIT. RioCan owns 177 Canadian properties with approximately 32 million square feet of net leasable area, and has a pipeline of about 21 million square feet zoned for development.
“We have a massive land bank of greenfield sites that we’re continuing to build out, so we’re able to leverage our expertise to work with retailers that want to be in these locations, that understand how it works, and where we can get the best deal for everybody.”
Katipunan said de-leasing, or opening up deals to change rent terms or buy someone out of a lease, has become more common and accepted – particularly with national tenants.
First Capital REIT has a 22-million-square-foot portfolio of properties in 136 neighbourhoods valued at $9.2 billion, and has two million square feet under development in six active projects that will create 1,827 residential units and 275,000 square feet of retail space.
“We have a site in Etobicoke that we got rezoned about eight years ago and we struggled, even at that point when the market was at its peak, to make the numbers work,” said First Capital head of development and construction Jennifer Arezes.
“So we severed off a piece of the parking lot, partnered on a condo development, and then went with the zoning permissions that we had in place and decided to – instead of demolishing this 100,000-square-foot, very high-performing shopping centre – reposition it.”
First Capital removed enclosed areas and provided tenants with new facades, expanded anchors and better signage, frontage and unit depths and dimensions. In-place rents were doubled.
“We’re doing three phases and each phase is about a year to 18 months,” Arezes said. “We can keep the rest of the shopping centre open, operating and paying rent while we’re doing each phase.”
“Internet-resistant” retail development
Arezes believes there’s room for more development in the grocery sector and other “Internet-resistant” tenants such as medical offices and daycare centres willing to pay more rent for good locations.
“There’s a delta of approximately 55 per cent between our in-place rents and what a tenant would have to pay if they move down the street into a new development,” she said. “We use that information when we’re discussing renewals with tenants, and we can see in-place year-over-year growth on these centres without really doing much.”
Ravelin Properties REIT, a Toronto-based landlord that recently rebranded after previously trading as Slate Office, is selling another property as it looks to pay down debt and strengthen its balance sheet amid liquidity concerns.
Ravelin, a real estate investment trust with about 50 commercial properties in Canada, the United States, and Ireland, sold 1189 Colonel Sam Dr., a single-tenant office building in Oshawa, east of Toronto, for $16.5 million, or about 11.8 U.S. dollars. The REIT said it sold the building after its first quarter ended on March 31.
The net cash proceeds from the disposition were fully used to reduce borrowings from the REIT’s Canadian revolving credit facility, Ravelin said.
The REIT has been working to rebound from several rough quarters and a wider loss with the support of activist investor and Chair George Armoyan.
Last month, G2S2 Capital Inc., the Halifax-based investment company controlled by Armoyan, purchased $600 million, or about 419 million U.S. dollars, of the debt and obligations of Ravelin Properties REIT as part of Armoyan’s plan to turn around the office owner.
Occupancy at Ravelin’s portfolio as of March 31 was 76.7%, the REIT said. That’s down slightly from 76.8% at the end of the previous quarter. The company had a net quarterly loss of $11,189,000 compared to a quarterly loss of $22,571,000 a year earlier.
At the end of 2024, the REIT arranged the early termination of its external management agreement with Slate Asset Management, which initially sponsored Slate Office REIT.
Ravelin said that in the first quarter, it achieved cost savings of $3 million by eliminating management fees and focusing more on overhead expense management.
Ravelin also said it has notified its external property manager of its Chicago properties of its decision to terminate their existing agreement, effective June 1. The REIT’s Chicago holdings include 20 South Clark, 120 South LaSalle and 275 N Field Dr..
The REIT said it will internalize property management and property-level accounting functions for these investment properties in Chicago.
Ravelin did not provide details on the buyer of the Oshawa building the REIT sold, but CoStar data indicates that Ontario Power Generation, or OPG, bought the property on April 25. Also per CoStar data, the 103,179-square-foot office building is leased by Concentrix Canada, a provider of outsourced call center and tech support operations.
OPG, a provincial Crown Corporation responsible for about half of the electricity generation in Ontario, already has a major presence in the area, having bought the former General Motors of Canada’s building and surrounding land at 1908 Colonel Sam Drive in Oshawa.
Officials with OPG did not immediately respond to a request for comment.
CBRE is marketing the largest shopping centre in Northern Ontario’s Sault Ste. Marie region, Station Mall, the most recent large shopping centre in the province to be put up for sale under receivership proceedings.
“I think there’s a lot of upside potential for the property,” CBRE executive vice-president Lauren White told RENX in an interview that also included vice-chairman Mike Czestochowski, senior VP Brad Walford and senior VP Sean Comiskey.
Markham, Ont.-based SM International Holdings Ltd. acquired the mall at 293 Bay St. for $30 million on June 30, 2022 from Algoma Central Corporation, the company that built it in the early 1970s. The deal involved $12 million in cash and an $18-million vendor take-back mortgage.
It went into receivership following a months-long court battle over that unpaid $18-million mortgage. The court action against SM International was launched by mortgage-holder Algoma Central Properties Inc., a subsidiary of Algoma Central Corporation.
Algoma Central Properties is the lone secured creditor, according to a list of creditors dated Jan. 31. There were 41 unsecured creditors owed $6.69 million on the list, topped by the City of Sault Ste. Marie, which is owed $2.1 million in property taxes.
B. Riley Farber was appointed receiver on Jan. 22 and CBRE was subsequently chosen to act as Station Mall’s property manager and to find a new owner for the shopping centre. CBRE is an unsecured creditor and was owed $391,456.97, according to the above-mentioned list.
CBRE was awarded the listing in April and started marketing Station Mall in mid-May.
“We’ll be running a fully transparent process,” Czestochowski explained. “We’re out there to get the best deal possible for the receiver and the lenders and we’re not leaving any stone unturned.”
Station Mall tenants and leasing activity
Station Mall was completed in 1973 and expanded with a second phase in 1981 and a third in 1988. It spans over 473,000 square feet of gross leasable area and is one of the largest enclosed shopping centres in Northern Ontario. It has also undergone extensive roof repairs in recent years.
The mall is home to 66 stores and services and a food court, but is only about 45 per cent occupied. Anchor tenants include Cineplex, SportChek, H&M and Sephora.
“There seems to be some interest in the market for leasing,” Walford said, “Just for whatever reason, the existing owners were unable to move forward with some of the opportunities in front of them.
“Sephora just moved in there, which made a lot of headlines locally, and there are some other tenants who are just on the brink of finalizing lease deals. There seems to be some leasing momentum and an opportunity for someone to run with that.”
Location provides redevelopment opportunities
Station Mall occupies a prime 35.1-acre waterfront site on the St. Marys River in Sault Ste. Marie’s downtown core. It has surplus land currently used for 2,250 surface parking spots that could accommodate additional retail pads, a hotel or a multifamily residential development.
“There was a hotel group that was interested in moving forward with the previous landlord, but for whatever reason they couldn’t come to an agreement,” Comiskey said.
“We’ve seen in the past, where we have large blocks of retail space, that other users come forward,” Czestochowski noted. “Office users may come forward or recreational users. I see, long-term, that there’s going to be various uses both within the mall and around it.”
“There’s also vacancy on both ends of the mall in space that previously was a Walmart and a Sears,” White added. “So someone could come in and decide that they want to keep those end units or take those down for more redevelopment area.”
The location offers direct access to the Trans-Canada Highway and the Canada-United States border. The site is across the street from Gateway Casinos, GFL Memorial Gardens and a fire station. It’s within walking distance of restaurants, hotels and waterfront paths.
“We’re already getting a lot of interest and a lot of calls from both institutional and private investors, both local and international,” Czestochowski said. “At the end of the day, we believe it’s somebody that’s going to be versed in dealing with large-scale retail investments.
“Would I be surprised to see some kind of cross between a user-investor, somebody that came in and utilized space for one of their retail platforms and their investment side came and bought the mall? That wouldn’t surprise me.”
No bid date deadline has been set.
Other Ontario malls in receivership
A few other prominent Ontario shopping centres have gone into receivership over the past couple of years.
Woodbine Mall Holdings Inc. et al., Ontario companies under common ownership that own various properties across Ontario, including Woodbine Mall & Fantasy Fair and Rexdale Mall in Etobicoke, were placed in receivership on May 2, 2023 following an application by Romspen Investment Corporation, which was owed approximately $333.3 million.
EY was appointed receiver and engaged Avison Young as property manager for Rexdale Mall and Woodbine Mall. Neither has yet been sold.
The three-level, 340,000-square-foot King Square Shopping Centre at 9390 Woodbine Ave. in Markham, previously owned by King Square Ltd., went into receivership after an application by MarshallZehr Group in December 2023.
Markham-based Homelife Landmark Realty Inc. Brokerage and Toronto-based AimHome Realty Inc. Brokerage were chosen by receiver EY to sell vacant retail units and parking spaces at the shopping centre.
According to a report prepared by EY last spring, the mall consisted of 560 commercial units, with approximately 150 — around 87,000 square feet — still owned by King Square. Forty-six of those were being leased to third parties.
RioCan Real Estate Investment Trust is looking to sell some of its major rental apartment holdings, a strategy Canada’s oldest real estate investment trust is implementing as activity in the overall housing market slows.
Jonathan Gitlin, president and CEO of RioCan, told analysts during a conference call to discuss its quarterly earnings that the retail landlord plans to sell off properties it owns under its brand, RioCan Living.
Toronto-based RioCan, which was founded in 1993, launched a residential arm in 2018, in part looking to increase density on its retail sites at a time when housing prices had exploded amidst affordability issues.
“Over the next 12 to 24 months, provided we can achieve prices that approximate IFRS (International Financial Reporting Standards) values, we will sell our interests in RioCan Living residential rental assets, and we’re off to a strong start,” Gitlin said on the call.
The REIT has agreed to sell its 50% interest in Brio in Calgary, part of a University City building cluster located at 3802 Brentwood Road NW. Gitlin said the deal terms are firm, and RioCan expects it to close in the coming months. No price was given.
RioCan’s decision to sell interests in its RioCan Living residential portfolio comes as Canada’s largest real estate board reported sales of existing homes in April were down 23.3% from a year earlier. The Toronto Regional Real Estate Board, or TRREB, said the average selling price last month was $1,107,463, down by 4.1% compared to April 2024.
TRREB also reported that April condominium apartment sales were off 22% from a year ago. A large percentage of condo apartments are owned by investors and ultimately end up being rented out. Although TRREB said the housing market could improve if discussions between Prime Minister Mark Carney and U.S. President Donald Trump about tariffs prove fruitful.
“Following the recent federal election, many households across the (Greater Toronto Area) are closely monitoring the evolution of our trade relationship with the United States,” said Elechia Barry-Sproule, president of the board, in a commentary. “If this relationship moves in a positive direction, we could see an uptick in transactions driven by improved consumer confidence and a market that is both more affordable and better supplied.”
In the Vancouver area, residential sales totalled 2,163 in April, a 23.6% decrease from the 2,831 sales recorded in April 2024, the real estate board said. It was 28.2% below the 10-year seasonal average.
Homebuyers wait out the storm
“What’s also unusual is starting the year with Canada’s largest trading partner threatening to tilt our economy into recession via trade policy, while at the same time having Canadians head to the polls to elect a new federal government,” said Andrew Lis, director of economics and data analytics with the Greater Vancouver Realtors in a commentary. “These issues have been hard to ignore, and the April home sales figures suggest some buyers have continued to patiently wait out the storm.”
Montreal bucked the downward home sales trend with 5,126 transactions closing in April, a 10% increase over the same period last year, according to the Quebec Professional Association of Real Estate Brokers.
As for RioCan, CEO Gitlin said its residential brand will continue to be part of the REIT’s operations. He said RioCan Living holdings are unique because they are so new and require low capital expenditures, making demand strong.
“They are not subject to rent control and therefore have strong growth profiles, Gitlin told analysts. “They’re in major markets and have transit at their doorsteps. These characteristics are generating interest from buyers and will continue to do so in the future.”
In a securities analyst report, CIBC World Markets said there was some expectation of RioCan’s residential decision, but its timing surprised analysts at the firm.
“The staged exit from the residential rental business was and has been something management has alluded to for some time; however, the announcement was arguably not expected to occur this early,” the analysts said in a report. “We believe investors will ultimately reward the decision as nearly $1 billion of lower cap rate assets are sold and the net proceeds used to pay down debt and repurchase units at a significantly higher implied cap rate.”
RioCan also said yesterday it is taking a $209 million write-down on its joint real estate investment with Hudson’s Bay Co. following the retailer’s decision to file for credit protection.
“As you’re aware, the situation is fluid, and it’ll take time before there’s certainty on the outcome of all of the assets in the JV partnership,” said Gitlin about HBC, a tenant at some RioCan properties. “At this time, it appears clear that there is no wholesale option that will result in the ongoing continuation of the business on the same scale as HBC operated before its CCAA filing,” referring to the Companies’ Creditors Arrangement Act.
“We took a substantial write-down of the equity value of our HBC interest on the basis that we don’t foresee an outcome that results in the payment of our current rents.”
For a long time in commercial real estate, retail tenant strategies were seen as the primary foundation to placemaking, following the thinking if you build it, it will come.
Now a growing number of developers and asset owners in Canada and the U.S. are increasingly embracing the concept of culturally driven placemaking activations as a key component of their real estate strategy, with the growing recognition of its potential to enhance community engagement, boost economic value, and differentiate projects in a competitive market.
Earlier this year I was invited to participate in the Art in Place workshop hosted by the Urban Land Institute (ULI) in Philadelphia. The two-day event brought together real estate developers, city officials, artists and placemaking experts from across North America to explore how art can be a key driver for economic, social and cultural value in real estate.
During one of the sessions, I presented MASSIVart’s work on ROYALMOUNT, an 800,000-sq.-ft. mixed-use destination in Montreal where art and culture were integrated from the very beginning to give the new luxury retail and entertainment complex a unique and distinct destination that goes beyond the just shopping.
Not only did this public art strategy help create a new cultural landmark for Montreal where visitors linger, but it also has made ROYALMOUNT a desirable location for retailers, driving up lease rates.
More evidence for placemaking ROI
I also presented our work Play on the Plaza at The Amazing Brentwood for Shape Properties in the Vancouver area, where we converted an underutilized public plaza at the entrance of the shopping centre into a playful summer space with life-sized games and seating areas.
Traditionally shopping centres often see a “summer slump” during the months of July and August. However, correlated with the timing of the Play on the Plaza installation, those summer months ended up as being the second- and third-highest traffic months for the year.
Shape Properties reported during that time an increase in foot traffic of 10.2 per cent, as well as a 5.9 per cent increase in new visitors compared to previous summers.
While weather, consumer trends and new retail openings may have also contributed to that success, Shape Properties saw this creative placemaking strategy as an important piece of their overall formula and repeated the installation again in summer of 2024.
ULI published a white paper summarizing the key takeaways from all the presentations, and reaffirmed the evolving trend we have been seeing unfold across multiple markets: as developers embed art and culture into the DNA of a project, the return goes far beyond aesthetics. Creative placemaking strategies not only help produce clear economic benefits, like increased foot traffic, sales and lease rates, they also help create emotional connections to a place beyond the transactional nature of it.
Recipe for success: A community-centric approach
Another common theme shared was how successful creative placemaking strategies often involve collaborating with placemaking strategy experts early in the planning and design process, to engage with the community and to develop the concepts and programming that will resonate.
This process often begins with understanding who will be visiting, living, shopping and working in your spaces, when they will be using it and what do they want or need? It is also just as important to understand what’s currently around your real estate for your strategy’s competitive positioning.
A developer that has really embraced an early integration of this is Northcrest Developments, leading the transformation of the 370-acre former Downsview Airport site, now known as YZD. For nearly 100 years, this site has been closed to the public and Northcrest is literally and figuratively opening the gates with a wide array of programming, from farmers’ markets to the signature Play on the Runway event.
By doing so it is helping foster critical emotional connections between city residents to the vast former airport lands and working with the local community to establish a unique identity and clear sense of place for YZD within the City of Toronto.
Over the coming decades, Northcrest will build seven vibrant, connected and complete neighbourhoods, where tens of thousands of people will live, go to work, and enjoy their community.
MASSIVart helped Northcrest develop its creative placemaking and public art masterplan for the development’s first district – The Hangar District. By doing this important placemaking work early on, Northcrest is helping secure YZD’s social and economic value for the future.
How did we get here?
How did the concept of real estate placemaking evolve to become more focused on the cultural elements and the idea of creating a bigger sense of place?
One way to look at it is that as our lives have become increasingly more digital, from shopping to working and socializing, we now need to be even more intentional about how we bring people together in the places we create.
Creative placemaking also used to be primarily in the domain of non-profit’s, art organizations and public realm initiatives from cities.
All these stakeholders still have very important roles to play in creating memorable and engaging urban places, but developer-led creative placemaking is now also having impact. This offers real estate strategies that help give people a reason to keep coming back to places regardless of the retail, consumer or workplace trends that may come and go.
Allied Properties REIT is continuing to sell assets as part of the large real estate investment trust’s strategy to strengthen its balance sheet.
Allied told analysts on a conference call it has contracts to sell three properties for about $50 million. “On March 25, 2025, Allied entered into an agreement to sell the Boardwalk-Revillion Building in Edmonton,” Allied said in its earnings report. “The sale is expected to close in the second quarter of this year. In addition, Allied has two low-yielding, noncore properties under sale contract, one in Montréal and one in Vancouver.”
It did not identify the other two properties it agreed to sell, but Allied did say it “expects to sell additional non-core properties in Montréal, Toronto, Calgary and Vancouver over the remainder of the year, primarily to users and entrepreneurial purchasers, and remains highly confident with respect to its sales target for this year.”
Allied President and CEO Cecilia Williams told analysts the dispositions are going well, in part because private market valuations are robust and match the REIT’s value per International Financial Reporting Standards or IFRS.
“All proceeds will be allocated to debt reduction,” she said on the call. “We’ve also improved our debt profile, taking short-term variable rate debt, and replacing it with longer-term fixed rate debt.”
Allied units have felt downward pressure since the COVID-19 pandemic amid a weaker office market. They closed at just above $15 on Friday after having been above $60 at one point.
According to its latest filings, the REIT still has a massive portfolio valued at $10.6 billion that includes 186 rental properties and 14.3 million square feet of rental space. It has 1.7 million square feet under development.
REIT reports increased leasing activity
Allied emphasized that leasing activity across its portfolio is picking up and said it conducted 280 lease tours in its rental portfolio in the first quarter.
The REIT’s occupied and leased area at the end of the first quarter was 85.9% and 86.9%, respectively. Allied said it renewed 75% of the leases that had been set to mature in the quarter, returning to the high end of its normal lease-renewal range of 70% to 75%.
“While it’s unclear what the short-term impact of the economic uncertainty will be on the demand for urban office space, we’re confident in our position to benefit from the long-term positive impact on Canadian cities,” Williams said.
Raymond James analysts said in a note that they want to see improvements in a few key areas before making a forecast on Allied’s near-term total return prospects. Those include a clear recovery in underlying Canadian office leasing demand and supply fundamentals that would result in greater sustainability in the distribution rate and improved balance sheet strength with a reduction in financial leverage metrics toward target levels, the analysts said.
“We still believe it could be a prudent capital allocation decision to at least temporarily adjust its monthly distribution rate in order to retain more cash flow and reduce financial leverage metrics,” the analysts said in a report.
Analysts with TD Cowen said after the call that they viewed the outlook for Allied as “fairly positive.”
“While management acknowledged increased macro uncertainty could push back the timing of operational goals, it is not yet showing up in any material way,” the TD analysts said in a report.
An ongoing expansion push will drive global hospitality company Hilton over 200 hotels in Canada this year, and that growth isn’t expected to slow anytime soon.
Hilton and Mississauga-based Inspiration Group have just signed a franchise agreement for Tempo by Hilton Toronto Airport, which is slated to open in 2028.
The 16-storey, 193-room property, to be designed by architecture firm Khalsa Design and owned and developed by Inspiration Group, will be the first Tempo by Hilton hotel in Canada when it opens.
Inspiration Group is involved in real estate development, hospitality, construction and technology.
“We’re always looking for opportunities to expand our portfolio across Canada and welcome first-in-market brands with the right owner to meet the ever-evolving needs of our guests,” Jeff Cury, senior director of development for Hilton in Canada, said in an email interview with RENX.
Tempo by Hilton Toronto Airport, to be located at 5900 Elmbank Rd. in Mississauga, will feature four suites. Some guest rooms will also include Peloton exercise equipment.
Tempo by Hilton Toronto Airport amenities
The hotel’s amenities will include: a coffee bar; a complimentary hydration bar; a fitness centre with a cardio space, weights area and recovery zone; an indoor swimming pool; and more than 3,000 square feet of meeting space, including two ballrooms and four meeting rooms.
“The brand’s ethos is built around the ambitious traveller seeking to maintain a sense of well-being and will offer a perfect retreat for our guests on the go,” Cury wrote.
Once open, Tempo by Hilton Toronto Airport will form part of Hilton Honors, the guest loyalty program for the company’s 24 brands.
Hilton’s growth in Canada
This latest addition to the company’s portfolio supports Hilton’s continued growth in Canada, where it has more than 190 hotels operating with more than 30,000 guest rooms across 13 brands. It will surpass 200 hotels in Canada this year.
“Across the country, we have nearly 110 hotels with more than 13,000 rooms across 12 brands in our development pipeline and in various stages of design and construction,” Cury explained.
“This year, we expect to open a total of nearly 20 hotels, including three Spark by Hilton properties opened in Q1, and others expected through the end of the year across multiple brands, including Tapestry Collection by Hilton, DoubleTree by Hilton, Spark by Hilton, Home2 Suites by Hilton, Tru by Hilton and Hampton by Hilton.”
Cury said Hilton’s resilient business model and strong partnerships with building owners positions it well in the Canadian hotel market.
“Looking ahead, we remain confident in our ability to deliver net unit growth in 2025, with a strong pipeline and continued growth in conversion opportunities. We see tremendous opportunities across the lifestyle category while focused-service brands continue to fuel our growth in the market.”
Hilton plans to introduce new lifestyle category hotels in Montreal, Toronto, Vancouver and other desirable Canadian destinations during the next three years, Cury added.
Hilton’s global portfolio
Hilton’s global portfolio is comprised of more than 8,600 properties and nearly 1.3 million guest rooms in 139 countries and territories.
Tempo by Hilton is one of the company’s newest lifestyle brands, with recent openings in New York City, Nashville, Tenn., Louisville, Ky. and Raleigh, N.C. Close to 60 additional Tempo properties are under development in cities including Belfast, Northern Ireland, Reykjavik, Iceland and Lisbon, Portugal.
Hilton has set a goal of doubling its lifestyle category hotel portfolio — with brands including Canopy by Hilton, Curio Collection by Hilton, Tapestry Collection by Hilton, Graduate by Hilton and Motto by Hilton — to 700 by 2028.
Inspiration Real Estate Group Ltd.
Inspiration Real Estate Group Ltd. was founded in 2007 and initially focused on purchasing commercial real estate properties in Ontario.
The company has since diversified into real estate repositioning and development. It now has a portfolio that includes retail plazas, gas stations, car rental outlets, franchised restaurants, hotels and residential developments.
Upcoming residential development projects include: Inspiration Tower and a townhome community in Windsor; and Inspiration Essa Tower in Barrie.
The company also has plans to further expand its hotel portfolio.
