Why Cadillac Fairview Is Building 16 York St. On Spec
Cadillac Fairview and the Ontario Pension Board are readying to launch construction on 16 York St. in the South Core. The 879K SF, 32-storey office tower will be built on spec, a signal of strong confidence in TO’s super-hot office market.
CF executive vice president of development Wayne Barwise said his firm does not normally build on spec. But it is moving forward on 16 York without securing an anchor tenant due to a rare confluence of favourable conditions in Toronto’s Class-A office market, where vacancy is 4%, among North America’s lowest. Office vacancy is 1.5% in South Core, which CF pioneered a decade ago with Maple Leaf Square, followed by Ice Condos (57 and 67 storeys), forging a dynamic mixed-use district in an area once covered by empty parking lots. “Companies love locating here because of all the amenities,” Barwise said.
Also key, 16 York — a $479M project slated to open in June 2020 — is a block from Union Station, and will be connected to the transit hub via the PATH network. “Transit is front-of-mind for every business today when looking for new premises,” Barwise said. CF’s 9.2M SF Toronto office portfolio, which includes RBC Centre and TD Centre, is 97.6% leased, “so we’re effectively full." It is a good problem to have, he said, but 16 York, at the southwest corner of York and Bremner Boulevard, will enable CF to better meet its clients' expansion needs. The tower will have 7K SF of retail at the base.
CF is in discussions with a number of prospective tenants for 16 York, and Barwise said he is optimistic deals will be done in due course, given tenants are seeking as much as 5M SF of new space downtown. Absorption at competing buildings, like EY Tower, Bay Adelaide East and One York Street, has been robust (they are 92% leased, according to Barwise). “We think there’s a terrific pipeline of tenants seeking the attributes 16 York offers.” The building, with a one-acre green roof 40 feet above street level, will target LEED Platinum and WELL certification, an occupant-centric standard focused on tenant well-being and operational efficiencies.
CF and OPB deepen their partnership with 16 York. The two firms also co-own RBC Centre and TD Centre, plus a future-development site at 160 Front St. W. In January, CF sold a 50% stake in its Vancouver portfolio to OPB. Toronto awaits the launch of several other high-profile office projects in 2017 — namely The Well and Bay Park Centre — but Barwise said CF has a jump on the competition because it already has its approvals in place. Construction on 16 York begins July 1. “We’re at a more advanced stage of readiness, and now that conditions are so favourable, we decided to proceed.”