Why Sun Life Deal Should Quell Your Fears
There's plenty of worry that Toronto is becoming overheated, thanks to the bounty of new office towers, malls, and mixed-use communities rising. (Don't put on your flame retardant suits just yet.) But Cushman & Wakefield prez Scott Chandler says Sun Life taking a 30% stake in One York and occupying 300k SF of space there actually makes him feel positive about where our market is headed. (C&W brokered the deal, which also includes Menkes Developments and the Healthcare of Ontario Pension Plan.)
The transaction shows that pension funds are moving into active development, on top of big institutions' desire to own quality assets in the core. While Scott wishes the recovery were stronger, he notes it's taking hold south of the border and there are positive signs already taking hold here: exports helping offset the slowdown in retail spending and housing construction, as well as strong pre-leasing levels in new office supply, which'll help prevent any collapse in vacancies and rental rates.
Scott also says interest rates are expected to remain low in a historical context. On the investment side, REITs remain attractive overall, and pension funds and advisors are operating with restrained debt levels and ample capital. “This is not 1991-1992 all over again,” Scott says. (We were so close to taking our neon leggings out of storage.) Prime assets across the country, like ones in Toronto's bustling South Core, remain relatively scarce and are viewed as long-term investment holds when they do hit the block.