- What The developer has placed at least 10 sites on the block within the last two years
- Why Current economic conditions mean that not all developments continue to be feasible
- What next The listings have coincided with layoffs
Toronto-based developer TAS has listed approximately half of its properties for roughly $88m combined in a dual bid to draw in construction partners and free up equity, Green Street News can reveal.
Cushman & Wakefield is marketing the development sites at 880 Eastern Avenue and 888 Dupont Street for around $20m and $22m, respectively, and TD Cornerstone Commercial Realty is shopping 453, 481 and 491 Eglinton Avenue West for $25.8m.
In July, the industrial warehouse at 772 Warden Avenue was on the block for $26.9m with CBRE. Green Street News can reveal that Marcus & Millichap has taken over, and is guiding $290/sq ft, or $24.8m.
Cushman is also marketing the office buildings at 860 Richmond Street West for $14.7m, and 142 Vine Avenue for $5.6m.
In the last two years, Colliers listed the development site at 3803 Dundas Street West for $36m, RBC listed a warehouse at 10 North Queen Street and JLL listed the development at 7 Labatt Ave and 77 River Street, but no sales ever materialized. TAS successfully disposed of 259 Geary Avenue, a retail asset with development potential, earning a 165% profit on its investment.
The company acquired the retail and office assets at 2347-2369 Eglinton Avenue East in 2022 but has yet to submit a development application for its planned purpose-built rental project.
Putting the properties – which amount to roughly half of its portfolio – up for sale serves two purposes, Rupert Duchesne, managing partner at TAS, told Green Street News. For some assets, doing so is the best bet for finding a development partner. For others, market conditions have made the company’s original plans unfeasible, and selling is the better option.
“There is almost no developer in the city that hasn’t got a challenge created by interest rates on the one hand and the frozen market on the other,” Duchesne said. “Clearly, the condo market is almost completely frozen. I don’t believe it’s going to recover for 18 months to two years. Demand for rental is huge, but nobody is putting any capital into new rental buildings because they’re unsure of what’s happening with interest rates and rental rates.”
He said the company considered every asset in every fund. “We have a selection of industrial and development sites. With the new economics, which do we think are going to actually be buildable? We knew we needed to get rid of a few of them in order to fund the development of the ones we wanted to keep long term,” he said.
The spate of listings coincided with layoffs, though Duchesne said the downsizing was also attributable to stalled projects. Affected roles, which were all on construction and development teams, will be rehired once market conditions improve.
Despite the relative standstill of the market, TAS is still in some degree of acquisition mode. As reported by Green Street News, the company closed on 1500 Birchmount Road in October, paying $60.5m for the former Laura Secord factory in a court-ordered sale. The firm plans to spend another $15m to $17m improving the building’s energy efficiency and carbon envelope.
As it continues deploying equity from its LP4 fund – which closed approximately a year ago, having raised $123m of equity commitments – Duchesne expects there will be one or two more acquisitions over the next six months.
“We’re in this bizarre period of trying to sell some buildings from our older funds whilst at the same time taking advantage of really good deals in the new fund because other people are selling assets at distressed prices,” Duchesne said.
“Those acquisitions will be what we’ve done historically, either industrial assets that need value-add repositioning and restoring – our calculations show that it’s much cheaper to take an existing building and upgrade it to today’s standards than it is to demolish an industrial building and build a new one – or classic ground-up development sites,” he said. “Those will almost certainly be for purpose-built rental, not for condo. … Going forward, most of what we will be doing in the short term is purpose-built rental, because that is a more fluid market.”
In May, TAS resubmitted plans for its 2 Tecumseth project, pivoting from condominium units to approximately 1,200 rental apartments, some of which will be affordable. TAS acquired the site in 2016 and has partnered with Woodbourne Investments for Phase 1 of what will be a three-phase development.
In November, TAS reached a settlement with the City of Toronto on its 38 Walmer Road project, marking a major step forward for the planned 25-storey residential tower. The property is owned by the Trustees of the Walmer Road Baptist Church.
Construction on its 3730 Kingston Road project is expected to begin in the fall of 2025 – the mixed-use tower will include 395 rental units, according to the December 2023 proposal to the City. TAS purchased the Scarborough site in 2022.
