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Real Estate Bisnow
January 17, 2013  
Timbercreek LTile3
Primaris Situation
No Longer Hostile

This morning saw a "cautiously celebratory" mood at Primaris’s 1 Adelaide East HQ after last night’s agreement for the REIT to be acquired by H&R for $4.6B, or $28 a share. ("Cautiously celebratory" also describes any parent when their child gets a driver's license.)

Some Primaris staffers feared for their jobs when the hostile bid from a consortium led by KingSett was announced in early December, and one who spoke with us today said, “We’re happy, but we know we’re not out of the woods yet.” Part of optimism comes from Primaris CEO John Morrison telling analysts on a conference call the internal management of the shopping mall specialist will largely remain intact. John says Primaris worked with advisors through the holidays, and there were multiple suitors, including pension funds. “It was a bit of a horse race and H&R crossed the line.” He pointed out the importance of Target opening 10 stores at Primaris properties this spring. “That’s why smart guys like [KingSett’s] Jon Love knew exactly when to go after Primaris.” The shareholder vote is expected in March. No word on whether KingSett and friends plan to up the ante.

Bisnow (PropManage)

Office Space-Transit Disconnect
Half the GTA’s office space (100M SF employing 500,000) isn’t served by serious public transit. That explains much of our congestion mess (not to mention the cult of 680News’ “traffic and weather on the ones”), according to a report released yesterday by the non-partisan Strategic Regional Research. “Those buildings aren’t going away, so we have to deal with this,” co-author Iain Dobson says. The Real Estate Search Corp founder wouldn’t halt current transit projects but notes they virtually ignore key suburban office nodes. He’d extend the Eglinton LRT to North Mississauga’s Hwy 401 corridor, which employs 100,000 car commuters, 45% from the 416. “This transit build-it-and-they-will-come approach has failed,” he says. With 100M SF more space expected by 2043, he also hopes we steer much of it to underutilized rail stations.

JLL Inks Retail Double-Play Combo
In baseball terms, Hugh O’Connell and Matthew Smith’s acquisition by JLL might be likened to a double-barreled free-agent signing. “Well, except for the money,” Hugh says. The retail specialists teamed up a decade ago at CBRE, working on more than $1.5B in deals. “It was an amicable split [with CBRE]. They realized this was a better move for us,” Matthew says. The JLL plan is to create a nationwide platform similar to the network they created in Ontario for CBRE. “We travelled every town and every street in the province,” Matthew says. Hugh adds they tend to split work along geographical lines. “Matthew’s married with four kids, so I do most of the travel.” JLL Canada, meanwhile, is in expansion mode, adding 40 employees in the past year.

Vaughan Mills To Expand
Some tell us Vaughan has a retail glut, but Ivanhoé Cambridge is betting $87M those folks are wrong. “We’ve found ourselves turning away retailers,” VP David Baffa said yesterday after Ivanhoé announced its first major Vaughan Mills expansion since the mall opened in 2004. Work starts in April on 150k SF and 450 parking spaces to accommodate 50 more retailers, including a giant LegoLand (don't go to that store in bare feet). The additions will open in phases in the second half of 2014 and bring total space to 1.1M SF. “We have the land, we have the parking, and we can make it happen.” We’re also told there’s a trademark on “Shoppertainment,” even if it sounds rather Simpsonesque.

Planning For Post-Industrial Toronto
As politicians, developers, planners, and brokers debate the future of GTA employment lands, Pierre Bergevin wishes they’d consider a few key points. “Manufacturing jobs aren’t coming back because nobody wants to pay two grand for a TV, or more for a car,” the Cushman & Wakefield CEO says. “We need an economic case for whatever we decide,” he says, adding that fighting to keep “employment land” zoning on older dysfunctional industrial buildings won’t create jobs. “We’re an enormous resource-based country. Why aren’t we training our displaced industrial workers for innovation in water, energy, and natural resources?”

QRC West Can Fly
Thinking above the box may become the norm in a downtown where demand for old brick-and-beam buildings outstrips supply. Phase 1 work on QRC West is under way and it involves suspending a new 11-floor building five-storeys above ground, joining three older buildings below via a high-ceiling atrium. “The design makes wonderful use of space between the old buildings while making each of them considerably more useful,” Allied REIT CEO Michael Emory says. QRC West will have 300k SF of office space and 40k SF of retail on Queen West (across Peter from the Peter Pan, where they got this flying building idea). The concrete-filled delta-frame support system is an engineering feat (though we’re told it’s been proven on other continents). Lead office tenant will be Sapient Corp.
Sure, the city’s RE geniuses sold that Bloor Street property to McDonald’s for half its market value, but the Bacon Chicken Snack Wrap is on for just $1.99. stephen.wickens@bisnow.com
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