February 5, 2015

The Resurgence of Purpose-Built Rental

On the spot William Lyon Mackenzie and company plotted the Upper Canada Rebellion that led to this nation's creation, Rockport Group has just launched a mixed-use purpose-built rental apartment project. (Show the Brits you're still angry by shopping there but pretending not to like it.)

It's the site where Montgomery's Tavern once stood on Yonge Street north of Eglinton Avenue. Bisnow met Rockport CEO Jack Winberg there on Wednesday, snapped with Northwest Atlantic broker Ira Bond in front of the old post office, a heritage building bearing the insignia of King Edward VIII (a rarity in the Commonwealth, given he reigned for under a year). The post office, which the community calls its jewelry box, will house 20k SF of retail, potentially eateries and a grocery store, plus a rooftop patio. The front portion of the property will remain a public square; behind this will rise a 27-storey rental apartment building, with 230-plus units. 

Rockport Group has built many a condo—Jack's father, Bert, introduced the concept to TO in the late 1960s—but Jack notes he had personal reasons for wanting Montgomery Square to be a rental building. “A guy like me doesn't get to own real estate at Yonge and Eglinton very often,” he tells Bisnow. “So this would be a trophy for our portfolio.” While it can be tough to make the economics work on purpose-built rentals, Jack says Yonge and Eglinton is one of the few places in the city that can support the rents Rockport will be asking at Montgomery Square: $3 to $3.25/SF for units averaging 650 to 700 SF.

Toronto hasn't seen much new purpose-built rental since Ontario introduced rent controls in the mid-1970s. (Condos have served as the de facto source of new rental supply.) But rental buildings are making a comeback. Rockport's not the only builder doing them; Concert Properties and Morguard, among others, are also developing projects. “Pension funds and institutional investors love rental buildings because they're such stable investment assets,” says Jack, noting Rockport has partnered with Access Self Storage and Woodburn Capital to finance Montgomery Square.

Construction is underway on the project, featuring an indoor dog walking area/wash station, outdoor swimming pool, gym, lounge areas and movie theatre. Ira says the goal for the commercial space--with 16-foot main floor ceilings; 12-foot on upper levels--is to “transform the area into a more significant midtown retail node.” The post office building will be retained and redeveloped fully intact, not just its facade, as can often be the case with heritage restorations. “This is not just four walls and a front door,” Ira points out. “There's a lot of character in what Rockport is designing here.”

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Colliers (200Matheson) TO
Metro Commercial (9Nicholas)
Addison (Office5) TO
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Bondfield Tapped to Redevelop
St. Michael's Hospital

Infrastructure Ontario has awarded Bondfield Construction the contract to design, build and finance the expansion and renovation of St. Michael's Hospital. At a cost of $301M, the development will see construction of a new 17-storey patient-care tower at Queen and Victoria streets that will carry the name of Mattamy Homes chief Peter Gilgan, who donated $30M toward the project, the largest single donation in the hospital's 122-year history. The 250k SF tower will include five new operating rooms and two new intensive care units.

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The project will also involve renovation of 150k SF of existing space, including doubling the size of the emergency department and replacement of the 100-year-old Shuter Wing with a new three-storey building. Work will begin immediately and take three years; the hospital will remain open. The redevelopment project will "transform patient care at St. Michael's Hospital,” noted CEO Dr. Robert Howard, adding the goal is to become Canada's premier critical care hospital.

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Target Liquidation Sales Start Today

Target Canada's liquidation sales begin today, with discounts up to 30% on merchandise. The Ontario Superior Court gave the retailer the green light on Wednesday, and told liquidators they could begin contacting parties interested in taking over store leases. Target leaves behind 133 stores, an estimated $1.1B worth of real estate. Yesterday's hearing was attended by lawyers representing landlords of the abandoned Target locations, including RioCan REIT, the retailer's single largest landlord, with 26 leased properties. Responding to landlord concerns that liquidation sales could tarnish the image of their properties, Target ordered there be no signs advertising a going-out-of-business or bankruptcy sale.

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Bisnow (RawSpace-Crowd)
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Do you plan on checking out the Target sales? ryan.starr@bisnow.com