[TOareaFan]

my understanding is that the floors are largely just concrete shells right now, there wouldn't be much to "convert" to office space. Lab space largely just means better ventilation, higher floors, and larger load bearing structural elements, none of which really need to be changed for office space.


I'll copy pasta a post I made on reddit about the issue:

In your senario A....how would you lose all of the $234 million loan? The only way that is possible is if the building is worth zero....presumably the real estate professionals at IO register charges against real estate projects they lend into......every other real estate lender does.

In your senario B.....why pay $317 million for it if you can foreclose and take the property?

As for the government needing space......why, then, just one month ago were they talking about selling real estate?

 

[interchange42]

4. There seems to be an inherent theme in there that 880 will be needed because government will always grow its civil service.

That's not what I was trying to say. In fact, the idea behind 880 was that the gov't could consolidate employees there, each with less square feet (but hopefully better designed square feet) than where they are now in multiple buildings. The gov't is leasing more square feet than 880 would represent, and would not necessarily fit everyone in any case. As MaRS represents less space than that, I was just suggesting that at some point MaRS may fill up and yet there would still be many gov't offices remaining in leased space. If the thinking has changed, and that it would rather continue to lease space than to own it, then 880 certainly won't be built until that thinking changes yet again.

Regarding lab space in MaRS II, innsertnamehere is correct; the building is ready for it, but there's nothing to convert now.

42

 

[TOareaFan]

That's not what I was trying to say. In fact, the idea behind 880 was that the gov't could consolidate employees there, each with less square feet (but hopefully better designed square feet) than where they are now in multiple buildings. The gov't is leasing more square feet than 880 would represent, and would not necessarily fit everyone in any case. As MaRS represents less space than that, I was just suggesting that at some point MaRS may fill up and yet there would still be many gov't offices remaining in leased space. If the thinking has changed, and that it would rather continue to lease space than to own it, then 880 certainly won't be built until that thinking changes yet again.

Regarding lab space in MaRS II, innsertnamehere is correct; the building is ready for it, but there's nothing to convert now.

42

I get that the space is likely base construction at the moment.....was responding to the notion you gave that it could be fitted out for office space now for the government now and then converted to lab space when demand grew for MaRS2 and the government was moving out again to make room for that new demand.

 

[Tuscani01]

There is an option C that no one has mentioned.

The Province can take over the building, and use the space for government employees. Once moved in, the Province can sell the building. A fully leased building will sell for much more than the current building would. The Province would likely make a return on its investment, and still end up with space for employees. A 10 year lease would provide enough security to whoever is taking the building over, while providing the Province with time to find a plan to consolidate employees.

It's what many companies have done, since it frees up the equity in the building and puts less risk in the hand of the company. In this case, the Province would be the company. In the end, its the cheapest (will likely lead to a profit) and least risky option.

 

[argus]

The Province can take over the building, and use the space for government employees. Once moved in, the Province can sell the building. A fully leased building will sell for much more than the current building would. The Province would likely make a return on its investment, and still end up with space for employees. A 10 year lease would provide enough security to whoever is taking the building over, while providing the Province with time to find a plan to consolidate employees.

It's what many companies have done, since it frees up the equity in the building and puts less risk in the hand of the company. In this case, the Province would be the company. In the end, its the cheapest (will likely lead to a profit) and least risky option.

A very good point. Of course, so long as the building isn't fully occupied, the cries of crisis will persist.

 

[TOareaFan]

There is an option C that no one has mentioned.

The Province can take over the building, and use the space for government employees. Once moved in, the Province can sell the building. A fully leased building will sell for much more than the current building would. The Province would likely make a return on its investment, and still end up with space for employees. A 10 year lease would provide enough security to whoever is taking the building over, while providing the Province with time to find a plan to consolidate employees.

It's what many companies have done, since it frees up the equity in the building and puts less risk in the hand of the company. In this case, the Province would be the company. In the end, its the cheapest (will likely lead to a profit) and least risky option.

Why not just list it for sale and have the government head lease 51% of the space?

 

[TOareaFan]

Regarding lab space in MaRS II, innsertnamehere is correct; the building is ready for it, but there's nothing to convert now.

42

According to the Toronto Star the cost of renovating this brand new building to turn it into general government office space is $106 million in addition to the cost of buying it. So "nothing" might be a bit of an underestimate.

 

[interchange42]

Converting something from one use to another, and finishing it for offices are two different things. I did not intend to say that they could move in without spending a cent.

42

 

[TOareaFan]

Converting something from one use to another, and finishing it for offices are two different things. I did not intend to say that they could move in without spending a cent.

42

Finishings in office buildings typically range from $50 - $100 psf.....landlords typically pay part of that in an allowance to tenants....in this case we will assume the following:

1, the amount the Star reports is for the entire building (the paper is not clear if it is or if it is just the portion the gov't intends to occupy) less the 31% of the building already occupied

2. As a landlord the gov't will pay 100% to tenants rather than a portion.

3. The psf # is $100

That would equate to $55.2 million......in other words....the gov't is going to spend ±$200 psf finishing the remaining 552,000 s.f. of space?

 

[freshcutgrass]

It is possible that the MaRS II building may yet be needed for lab space as the medical research industry expands here, but they seem to be overbuilt for the time being.

42

It seems to me that the main priority is to protect the expansion needs of the MaRS concept. Why would anybody assume it will never expand??? Or even more absurdly...why would anyone want it to go "bankrupt"????

 

[Tuscani01]

It seems to me that the main priority is to protect the expansion needs of the MaRS concept. Why would anybody assume it will never expand??? Or even more absurdly...why would anyone want it to go "bankrupt"????

Because some people feel that government should not be in this position. They would like to see the private sector take up all of the government's role in projects like these since they will not put the public at risk should these ventures fail. If it goes bankrupt, it means it was not needed/in demand, so it shouldn't have been built to begin with.

 

[AlvinofDiaspar]

The problem is that Phase II used government labs to kickstart the project - and it proceeded without regard to the private sector needs/demand. It isn't a bad place to spend money since we do need the labs, but at the same time, one should be realistic about the business case.

Putting bureaucrats in it is probably the worst idea. In the short term, they might be better off providing the space for private companies at below market rate while the province offer a limited time subsidy. That, or maybe we should centralize the research labs in the hospital row and open up the new spaces for patient use (and space is always something always in demand at downtown hospitals).

AoD

 

[TOareaFan]

The problem is that Phase II used government labs to kickstart the project - and it proceeded without regard to the private sector needs/demand. It isn't a bad place to spend money since we do need the labs, but at the same time, one should be realistic about the business case.

Putting bureaucrats in it is probably the worst idea. In the short term, they might be better off providing the space for private companies at below market rate while the province offer a limited time subsidy. That, or maybe we should centralize the research labs in the hospital row and open up the new spaces for patient use (and space is always something always in demand at downtown hospitals).

AoD

There is a reason that no private sector office buildings get built on spec.

 

[AlvinofDiaspar]

TOareafan:

Well, I don't know about that - a good chunk of the office towers going up right now only got what 30, 40% of the space lined up with tenants? Anyways, MaRS is bit of a unique case anyways - it's the quasi-public/private use and how it influences decisions that is problematic.

In any case, like I have said, it isn't a bad idea or one that is worth spending money on - it's more an issue of how to utilize that empty space available in a way that is most beneficial to the state goal of the org and the whole biomedical field in general at this point.

Though as I have said in another thread (the HRRH one I believe), we really should be building a standalone BSL 4 lab here in Toronto given our status of an international hub - we shouldn't have to ship samples out to Winnipeg when our hospitals will likely be at the front lines. Unfortunately I highly doubt you can do it in the MaRS complex.

And if I am being uncharitable - I'd rather spend money on a labs than on horse breeding.

AoD

 

[TOareaFan]

TOareafan:

Well, I don't know about that - a good chunk of the office towers going up right now only got what 30, 40% of the space lined up with tenants?

Pension fund owned buildings can go with that number (but usually a bit higher)....but then again they are not borrowing money to construct. A typical building needing financing will need 50% + pre-leasing and get financing of around 75% of cost.

Here we have a spec office building going up (no pre-leasing at all...the tenants there came along after construction started) and got 100% financing of the construction costs.......and the government gave them a grant to buy the land.

I would challenge anyone to find zero equity, 100% financed, 100% spec office construction....anywhere.

In any case, like I have said, it isn't a bad idea or one that is worth spending money on - it's more an issue of how to utilize that empty space available in a way that is most beneficial to the state goal of the org and the whole biomedical field in general at this point.

it is going to be used for standard government offices.