Developers Submit New Proposal For Site Where Toronto Had Planned Rail-Deck Park

Downtown Toronto’s rail-deck development is moving forward. This week, developers submitted a formal application to the City of Toronto to build 11 towers – with 5,750 homes, 11,000 square metres of retail space and a hotel – above the rail corridor.

This would come instead of the proposed Rail Deck Park – but could provide as much as 4.45 hectares of parks (11 acres). The project’s lead architect says the proposal is just a “starting point” for negotiations.

If that’s true, a six-year debate over the future of downtown Toronto could wind up in a good place.

Since winning a planning dispute with the city last year, the development team has radically altered its plans, now overseen by Dermot Sweeny and his firm Sweeny&Co Architects.

“We’ve been working to make sure that this development will accommodate a great park,” Mr. Sweeny said recently, “and it will engage with the park and make it a great place.”

The new design places the towers in a strip along Front Street, lining it with shops and a sidewalk. A park at the foot of Portland Street would cut south between two towers, with a mild slope up from the street that is in places fully accessible. Privately owned public space would fill two more spaces to the east – and if Toronto wants to make a deal, a much larger area could become park.

Mr. Sweeny’s clients are a partnership of CRAFT Development Corporation, the Kingsmen Group, Fengate Asset Management and LiUNA Pension Fund of Central and Eastern Canada. This is largely the same group that, in 2013, locked up the air rights over the tracks that cut through downtown Toronto. It obtained rights to the area from Bathurst Street to east of Spadina Avenue.

This stretch of air has been a legal and political battleground ever since. After the developers approached city hall with this idea, the municipal planning department decided to plan for a park, with a construction cost most recently estimated near $2-billion. Local councillor Joe Cressy and Mayor John Tory advocated forcefully for the park, albeit without ever fully explaining how it could be paid for.

Last year, the developers won. Ontario’s Local Planning Appeal Tribunal approved a version of their project, which involved the prominent architect Moshe Safdie.

But as city planners pointed out, this project had serious design problems.

One: It lifted the project high up above the street. This meant stairs, escalators and elevators were needed to get people into the public spaces; this is an unacceptable condition in terms of accessibility and urban design.

Two: The architecture included a large shopping mall, which would have taken the street life and commercial activity indoors. As I wrote last year, this was terrible urbanism.

The new proposal solves most of those problems. The design team includes architect Peter McMillan, who had consulted on the city’s park proposal. The “deck” structure is now considerably thinner and the park space is now at a level modestly above the street. The design shows several routes from the street up into the park on modest slopes; the main passageway, at the foot of Portland Street, would be fully accessible to people with disabilities.

And the shopping mall has gone away. Instead, the developers are now proposing retail stores on Front Street. Mr. Sweeny argues – correctly – that this area of Front Street is inhospitable to pedestrians and far too wide a road.

The secret sauce here is that they’re asking to use public land: a strip about four metres wide along Front Street. That would allow them to make a gentler slope between street and park, and provide well-proportioned storefronts facing the street.

For this and other public land they are willing to pay the city. However, to build the full 4.45-hectare park, they want a gross contribution from the city of roughly $670-million. This is a large number.

On the other hand, the city’s own park proposal would cost three times as much for twice the park – and the city still has to buy out the developers to do it. This warrants a haggle.

Two issues remain.

One: Is this an actual project, and not just an attempt to squeeze money out of the city? It’s hard to say for sure, given the technical and financial complexities. However, there is reason to believe a rail-deck development like this one is feasible. Major development company Allied Properties REIT recently acquired a patch of air rights above the tracks for roughly $50-million.

The rail-deck partners and architects say they’re for real. “One hundred per cent, absolutely,” said Joseph Mancinelli, chair of the LiUNA Pension Fund, which is the newest partner in the project. “This will create a return, and a tremendous amount of work for our members.” LiUNA represents concrete trades. “It is a legacy project.”

Two: Can a deal be made here? Probably. The developers express an eagerness to collaborate with the city. But they also say they’re ready and willing to build just their towers and a small park, leaving the rest of the air over the rail corridor unbuilt.

Some Torontonians will paint this as a loss for the public realm. But I am skeptical that the city – which has been ruled by austerity for a generation now – will find the political and financial capital to build a Rail Deck Park by itself. A development and park is better than a pie in the sky. With the right design, it could even be great.

Source The Globe And Mail. Click here to read a full story

InterRent Acquired A Record Number Of Units, Rising Revenues In 2021

InterRent Real Estate Investment Trust acquired a record number of units and saw both its occupancy rate and rents increase last year.

The Ottawa-based REIT (IIP-UN-T) released its fourth-quarter and year-end results on March 8 and its top executives hosted a webcast presentation and conference call to discuss the performance and some of the trust’s business initiatives.

“We’ve really held fast on keeping our rents and not worrying about occupancy,” chief executive officer Mike McGahan said during his opening remarks. “We’ve actually utilized that time to make upgrades for units.

“We felt that, in the long run, that was the better move. We felt a lot of pain for a couple of years over it, but I feel very confident that it’s the right move and I think we’re all going to see some good things coming forward for the company.”

InterRent’s strategy is to: expand its portfolio primarily within markets that have exhibited stable vacancies and have sufficient units available to attain the critical mass necessary to implement an efficient portfolio management structure; and offer opportunities for accretive acquisitions.

Record year for acquisitions

InterRent acquired 1,829 units at a total purchase price of $727.3 million (at 100 per cent share) during 2021, including its first properties in Vancouver.

McGahan said it’s difficult to acquire scale in Vancouver, but once you have it you can add to it. InterRent acquired 50 per cent shares in 19 properties with 809 units valued at $382.9 million through four Vancouver transactions in 2021.

InterRent also acquired a 50 per cent stake in two Vancouver properties with 57 units that had a combined price of $25.6 million earlier this year.

“We’re one of the few players that do have a platform there and I think it’s going to work incredibly well,” said McGahan.

InterRent’s other 2021 acquisitions were:

– six properties with 574 units valued at $234.5 million in Toronto, Oakville and Mississauga;

– two properties with 169 units valued at $52.5 million in Montreal and Westmount, Que.;

– two properties with 272 units valued at $53.4 million in St. Catharines, Ont.;

– and one property with five units valued at $4 million in Ottawa.

The Mississauga acquisition was a 50 per cent stake, while InterRent fully owns the rest of the properties.

“It’s competitive out there and there’s lots of capital chasing our asset class,” said president Brad Cutsey. “We aren’t willing to get caught up in the frenzy at any price.

“We have not relaxed our underwriting requirements or our internal return hurdles. We’ll continue to only pursue deals that make sense and will create value over the long term.”

The InterRent portfolio performance

InterRent’s occupancy rate was 95.6 per cent in December, an improvement of 120 basis points from September and 430 basis points from a year earlier.

While occupancies improved in all of the REIT’s core regions, it was most pronounced in Vancouver, where the vacancy rate at its newly acquired properties dropped from 16 per cent in the first quarter to 3.7 per cent by the end of 2021.

“We still have some vacancy in the cores in our markets,” said McGahan. “Montreal is where we’ve had the hardest time, but I truly believe that once immigration and international students come back that that will come back, too.

“We’ve seen it in Ottawa and also in Toronto in the cores. I have to tell you I’m surprised that Ottawa has held in as well as it has, especially because we’re not seeing as many people as we would like to in our downtown core.”

Financial performance

Operating revenues grew 20.1 per cent to $50.3 million in the fourth quarter, finishing the year with a 15.8 per cent improvement over the previous year at $185.1 million. Occupancy gains, a five per cent increase in average rent per unit and successful acquisition activity are credited with the improvement.

Same-property net operating income rose 3.1 per cent from 2020 to $102.8 million. Net income increased to $369.7 million from $219 million.

Funds from operations of $72.8 million translated to 15.8 per cent growth overall and 9.4 per cent on a per-unit basis compared to 2020.

InterRent had a debt-to-gross-book-value ratio of 36.7 per cent at the end of 2021, when it had mortgages of $1.4 billion. It has $450 million in mortgages maturing in 2022, with much of that coming in the first half of the year.

The average term to maturity for InterRent’s mortgages is 3.6 years, with a weighted average interest cost of 2.38 per cent.

Sixty-three per cent of mortgages are Canada Mortgage and Housing Corporation-insured. Chief financial officer Curt Millar expects that to return to historical norms in the 80 per cent range while increasing the average term to maturity to about six years by the end of 2022.

The weighted average interest cost is expected to rise by 15 to 20 basis points.

Capital expenditures

Maintenance capital expenditures have remained consistent on a per-unit level for the past few years, at close to $1,000, according to Cutsey.

Increased spending on the non-repositioned portfolio and on value-enhancing initiatives for the repositioned portfolio combined for a total of $71 million. That puts it back in line with 2019 spending of $70 million, after dipping to $45 million in 2020 due to an initial slowdown when the pandemic first hit.

“About a third of our portfolio is at various stages in our repositioning program,” said Cutsey. “We see great value-creation potential in the years ahead. These properties will undergo work in a couple of years, with individual suite upgrades following the cadence of natural resident turnover.

“Our approach is to apply repositioning expertise to create beautiful, safe and quality communities for residents to call home by simultaneously extending the useful life of the existing housing supply and creating value for all stakeholders.”

InterRent believes this is a win-win strategy for all stakeholders as well as a climate-conscious option, since the program extends the benefit of the embodied carbon in existing structures while also loading up on energy-saving measures and fixtures.

“We’re not a short-term results company,” said McGahan. “We’re building this for the long run.”

Development pipeline

InterRent is adaptively reusing obsolete office stock at 473 Albert St. in Ottawa. It expects to complete 158 residential units in Q4 2022 after a total investment of $73 million. It is forecasted to offer a yield of 4.4 per cent.

InterRent’s development pipeline also includes:

– a 47.5 per cent share of a property at 900 Albert St. in Ottawa that’s in the planning stages. It’s anticipated to have 1,241 residential units and approximately 510,000 square feet of commercial space, with the earliest start date in early 2023;

– a 100 per cent share of a property at Richmond Road and Churchill Avenue North in Ottawa. Also in the planning stages, it’s anticipated to have 180 residential units and approximately 19,000 square feet of commercial space, with the earliest start date later in 2022;

– and a 25 per cent share of GO Transit land in Burlington that’s in the planning stages and is anticipated to have 2,514 residential units and approximately 40,000 square feet of commercial space. It could also start as early as later this year.

There are also intensification opportunities at existing InterRent properties, according to McGahan.

Source Real Estate News EXchange. Click here to read a full story

Vaughan Adds Its Voice To Those Calling For Ontario Land Tribunal To Be replaced

Vaughan joins dozens of Greater Toronto Area municipalities in wanting to reclaim their urban planning power as the province gradually trims municipal clout amid the affordable housing crisis and ahead of elections, a councillor said.

On March 22, Vaughan councillors approved a resolution by Coun. Alan Shefman and Coun. Marilyn Iafrate calling on the province to replace the Ontario Land Tribunal as the appeal body for municipal official plans.

The two are asking the province to establish a fair and efficient process for such appeals.

“I can tell you that about 23 municipalities have endorsed replacing the Ontario Land Tribunal as it currently only serves the development community,” Iafrate said, alluding that the figure could balloon especially since Toronto is speculated to be passing a similar resolution.

Iafrate dubbed the current system as “broken and not serving the public good.”

“Councillors from all municipalities are talking about this issue and are very motivated to send a message to Queen’s Park that we want changes,” Iafrate added.

The request to the province aims to protect the interests of any municipality’s decision-making process and that of local communities, which are “completely disadvantaged at fighting the developers at the Tribunal.”

“We simply ask for a level playing field,” Iafrate summarized the resolution’s ethos.

While municipalities are creatures of the province and only have the powers the province grants them, cities such as Vaughan argue that they spend millions in taxpayers’ money and other municipal resources to develop their official plans.

And Vaughan is already on point with meeting its official plans’ requirements and its councillors and staff are expressing their support for growth.

Not only that, Vaughan councillors also have a problem with the province’s housing affordability task force they say is further eroding their power.

Haiqing Xu, deputy city manager, expressed alarm in his March 22 report over the province’s encroachment, saying there are complex causes behind the housing crisis, and at times the province’s complicated process makes it hard to expediently plan.

“Municipalities have a significant role to play to help increase the supply of new homes through expediting planning approvals, infrastructure developments and issuance of building permits,” Xu wrote.

Xu also flagged parts of the 55 recommendations Ontario had in its housing affordability task force’s draft report published on Jan. 25 that could significantly impact land-use planning at the municipal level.

Xu is alarmed over these “as-of-right” developments and approvals:

1 – Up to four units and up to four storeys on a single residential lot

2 – Secondary suits, multi-tenant housing, conversion of underutilized or redundant commercial properties to residential or mixed residential and commercial use

3 – Zoning up to unlimited height and unlimited density in the immediate proximity of individual major transit stations within two years if municipal zoning remains insufficient to meet provincial density targets

4 – Zoning of six to 11 storeys with no minimum parking requirements on any streets utilized by public transit, including streets on bus and streetcar routes

“These recommendations would lower design standards and allow intensification to spread to existing neighbours where there is no major infrastructure to support such growth,” Xu said.

If these recommendations go through, municipal councils will no longer have the authority to decide on these developments, he added.

“Instead, they will receive all complaints about the reduced quality of life, e.g. lowered water pressure, excessive street parking and shadowed backyards.”

The resolution and Xu’s report come after regional and local councillor Mario Ferri alongside his colleagues questioned what was the city’s communication strategy as a response to these recommendations.

“People out there need to understand and know what is being proposed so that they can address that as the election comes closer,” he said.

These recommendations will “basically obliterate any role that we have” as well as that of the public, Ferri added, echoing other councillors’ sentiments.

Source Toronto Star. Click here to read a full story

Geothermal Rental at 252 Parliament Applied by Core Development Group Approved by City

The City of Toronto recently approved an application for the rezoning of 252 Parliament Street. Originally applied for in 2020 by Core Development Group, the Studio JCI-designed, 9-storey, mixed-use building was proposed to bring 71 rental units with 140m² of at-grade retail and office space to the property. A particularly enticing feature of the proposal is its geothermal heating and cooling component. 

Located mid-block between Shuter Street and Dundas Street East, the revised proposal incorporates numerous changes from the original application. The residential gross floor area (GFA) increases from 4,958 to 5,121m², despite which the number of units drops from 71 to 69. At the same time, the commercial/retail GFA drops from 140 to 129m², still leaving most of the building frontage on Parliament Street occupied by commercial/retail space. The remainder of the Parliament Street frontage is allocated for a residential entrance and mail-room. Floors 2 to 9 remain dedicated to residential uses.

While the proposal has maintained a building height of 9-storeys, (31 metres high including the mechanical penthouse), now that the mixed use building consists of 69 dwelling units, the unit breakdown has been readjusted to include 35 studios (51%), 10 three-bedrooms (14%), and 24 four-bedrooms (35%), an unusually high number of larger units. 

The proposal’s indoor amenity space, of which a total of 163m² is offered, is to be located on the 9th floor, except for a pet wash room on the ground floor. The outdoor amenity space, which increases from 227 to 250m², is in the form of terraces on the 9th floor, and two courtyards located at the north and south sides of the building, on the ground floor and 2nd floor respectively. The amenity space has been designed so that the indoor space is adjacent to the outdoor space.

With the changes to the suites, other changes to the building also include a decrease in the number of vehicle parking spaces from 20 to 10, as well as a decrease in the number of bicycle parking spaces from 88 to 78.

The Planning Department applauded the work on the project, saying in their final report, “the proposal has also adapted to provide a better quality of life within the development, including relocating bicycle parking spaces closer to the bicycle stair ramp, and allocating a greater proportion of the outdoor amenity space towards usable and programmable space instead of landscaped area.”

The non-residential component of this proposal is subject to a 2% parkland dedication while the residential component is subject to a 10% dedication, which the developer is planning to satisfy through a cash in-lieu payment. The money is meant to be used by the City within the surrounding community within six months, or if a suitable site cannot be found in that time, to be retained for another place of need. Parks, Forestry and Recreation staff have also commented on the need to provide onsite dog relief stations to help alleviate the pressure on neighbourhood parks; as you can see in the image below, the site is some distance from a park, but is across the street from a fenced off property where the TDCSB is considering that a school be potentially built. 

Finally, the site is within a 500 metre radius of the planned Ontario Line subway station at Moss Park, which should bring significant growth to the community. For the moment, the property is within walking distance to streetcar routes on Queen and Dundas streets

Source Urban Toronto. Click here to read a full story

Greater Toronto Area Commercial Q4 2021 Statistics

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Source Altus Group. Click here.