[travis3000]

a part of me is surprised national bank financial has not built a new massive office tower in the city. they built there new tower in Montreal they have a new one in Vancouver they just slapped there name and logo on a tower in Edmonton i for one would love the idea of the hub becoming a new office for them and they move out of the other building in Toronto into here.

I don't think National Bank needs 900,000 SQ FT of space. John Peets at Oxford is actively looking for an anchor. That's what they need to commit to.

 

[Dreambig1]

I don't think National Bank needs 900,000 SQ FT of space. John Peets at Oxford is actively looking for an anchor. That's what they need to commit to.

Maybe not the full 900,000 sq ft, but at least move all their Toronto operations here and become the lead tenant; the remaining space can be leased to others.

 

[Vanalla]

'Toronto is on fire': Canada's biggest office market seeing surge in demand as workers return​

What particularly interests me about this graph is that AAA is at pre-pandemic levels, A has a long way to go, B is increasing in vacancy, and C is decreasing.

My theory is that the flight to quality conversation is ruling the day with occupiers - the primary lure to get employees back to office. Prox to Union, pleasant, modern office spaces etc all being large draws. A and C class is likely driven by occupiers choosing a satellite office model, opening smaller offices in suburban parts of town for the employees who have relocated to the wider Golden Horseshoe since 2020. Long story short: It's ALL about attracting employees back to office. Whoever has the right strategy remains to be seen.

That all said: the pre-pandemic office market was an occupancy crisis. Manhattan's office market sat pretty at 10-20% vacancy for the past century, even through major business cycle downswings. The Toronto market is truly an outlier.

What does this mean for the HUB? Class AAA, A, and even C are all well-within what is a healthy development environment for new builds. While this development might change from what's proposed, I believe there's strong precedence/ability for the market to absorb it if it was built as-proposed today. Anchor tenant is a major hurdle, as is the ongoing unprecedented trade war and re-shoring of jobs by American megacorps that previously would have nearshored to Canada.

 

[Koops65]

Link to HD render

 

[Tormick]

What particularly interests me about this graph is that AAA is at pre-pandemic levels, A has a long way to go, B is increasing in vacancy, and C is decreasing.

My theory is that the flight to quality conversation is ruling the day with occupiers - the primary lure to get employees back to office. Prox to Union, pleasant, modern office spaces etc all being large draws. A and C class is likely driven by occupiers choosing a satellite office model, opening smaller offices in suburban parts of town for the employees who have relocated to the wider Golden Horseshoe since 2020. Long story short: It's ALL about attracting employees back to office. Whoever has the right strategy remains to be seen.

That all said: the pre-pandemic office market was an occupancy crisis. Manhattan's office market sat pretty at 10-20% vacancy for the past century, even through major business cycle downswings. The Toronto market is truly an outlier.

What does this mean for the HUB? Class AAA, A, and even C are all well-within what is a healthy development environment for new builds. While this development might change from what's proposed, I believe there's strong precedence/ability for the market to absorb it if it was built as-proposed today. Anchor tenant is a major hurdle, as is the ongoing unprecedented trade war and re-shoring of jobs by American megacorps that previously would have nearshored to Canada.

An issue though is that construction costs have drastically increased since pre-pandemic, which means rents have had to increase. I don't believe rents have matched construction inflation costs yet, and we'll need more pressure on space limitations before this gets built.

I know developments connected to PATH are considered AAA, but does this building being South of Front (and South of the gardiner expressway) still make it AAA? Would it command the same rents as the new TD Terrace building which is slightly W of the financial district (and to the best of my knowledge not PATH connected)

 

[ProjectEnd]

An issue though is that construction costs have drastically increased since pre-pandemic, which means rents have had to increase. I don't believe rents have matched construction inflation costs yet, and we'll need more pressure on space limitations before this gets built.

I know developments connected to PATH are considered AAA, but does this building being South of Front (and South of the gardiner expressway) still make it AAA? Would it command the same rents as the new TD Terrace building which is slightly W of the financial district (and to the best of my knowledge not PATH connected)

Construction costs are currently the lowest they've been in six or seven years. We're into mid-twenty-teens levels on costing right now.

 

[Northern Light]

An issue though is that construction costs have drastically increased since pre-pandemic, which means rents have had to increase. I don't believe rents have matched construction inflation costs yet, and we'll need more pressure on space limitations before this gets built.

I know developments connected to PATH are considered AAA, but does this building being South of Front (and South of the gardiner expressway) still make it AAA? Would it command the same rents as the new TD Terrace building which is slightly W of the financial district (and to the best of my knowledge not PATH connected)

@ProjectEnd addressed the cost side, let me tackle AAA status.

1) It's important to understand AAA status as with the other classifications isn't just location, though that is very much a factor. It's about floor plate size, ceiling heights, modern needs (top tier fiber) and building amenities among other things.

2) Location matters to some degree based on views/appearance of the neighbours but mostly, it's driven by proximity, particularly to Union and or the subway.

Scotia Plaza is AAA and is over 500M from Union. The Hub would be under 300M away.

Taking that together, yes, the Hub would be AAA/Trophy space.

As a side note, the City has plans to massively spruce up Bay Street, at some future point.

 

[maestro]

a part of me is surprised national bank financial has not built a new massive office tower in the city. they built there new tower in Montreal they have a new one in Vancouver they just slapped there name and logo on a tower in Edmonton i for one would love the idea of the hub becoming a new office for them and they move out of the other building in Toronto into here.

It's not headquartered in Toronto. It is in Montreal and they purchased Canadian Western Bank not too long ago inheriting CWB's Edmonton based head office. A big part of their growth were customers seeing them as the "local" alternative to Bay Street's big five.

 

[A Torontonian Now]

Construction costs are currently the lowest they've been in six or seven years. We're into mid-twenty-teens levels on costing right now.

So interesting to hear this from you. I recently heard a similar anecdote about the quality of contractors and competitiveness of pricing bidding on a tender for a large project. The construction market is at an interesting point.

 

[Dreambig1]

It's not headquartered in Toronto. It is in Montreal and they purchased Canadian Western Bank not too long ago inheriting CWB's Edmonton based head office. A big part of their growth were customers seeing them as the "local" alternative to Bay Street's big five.

National Bank is quickly turning the big 5 into the big 6, which is good for consumer choice i suppose. yes its HQ is Montreal, but it would be nice to see Toronto's operations move into a nice tower like this, joining the other firms in the nation's "financial and economic capital." The remaining space would then be leased out to other companies, similar to CIBC square were boston consulting and Microsoft and others took up space after CIBC

 

[ProjectEnd]

So interesting to hear this from you. I recently heard a similar anecdote about the quality of contractors and competitiveness of pricing bidding on a tender for a large project. The construction market is at an interesting point.

For reference: in 2021 when everything was blazing hot, we were tracking high $400s and even low $500s. Today, there is a 50s building that we all know that is about halfway up and is locked in at $305. And my sense is it's only going to compress further in the coming year.

 

[UtakataNoAnnex]

Construction costs are currently the lowest they've been in six or seven years. We're into mid-twenty-teens levels on costing right now.

...is this because our economy manage to cut the land of Milk & Tariffs from the loop here?