DarnDirtyApe
Active Member
Did the province guarantee the loan on the property? I can see it making some sense to buy the building if they would have been on the hook in case of default...
Did the province guarantee the loan on the property? I can see it making some sense to buy the building if they would have been on the hook in case of default...
Duguid did provide a one-page opinion from Ernst and Young on the estimated value of the building, which he acknowledged he incorrectly described previously as a report.
Sick kids moved their research labs from Mars 1 to their new building, so presumably there is built out space there available for them to move into.
What I don't understand.... seem to recall that Phase 1 was basically fully leased from opening day. There were articles in the newspaper talking about Toronto's burgeoning research sector, etc...
Why the complete reversal of fortune with phase 2?
Yes it would seem that one of the things this announcement does is shed even more negative light on the MaRS issue. When asked about why MaRS went ahead with phase II (on a spec basis no less) the most common answer we get is that with the leasing success of MaRS I they felt the market would be receptive. Now, through the Princess Margaret announcement we find out that the success of phase I was leasing 10 of 13 floors to Sick Kids! So the entire leasing success of phase I was a big local hospital took over 75% of the space and we were able to lease the other 25% so we thought it was a good idea to go ahead with a 300k expansion without any pre-leasing in place!
Also, during the "scandal" at QP over Phase II....Phase I has been repeatedly described as fully leased/occupied.....anyone know when Sick Kids vacated....because it would seem that since that time Phase I has been largely empty too.
Now I'd still call phase 1 a success at the time it doesn't matter who leased it or how much space the single tenant took ... its research ... that's the point. Where I'd 100% agree with you is; the sick kids building has been in the works for over 5/10 years, they would clearly have known once it finished they'd move all the space they had in that building, implying the argument mars 1 was full was a stretch to the say the least.
To be clear, leasing a big block to one tenant does not mean Phase I was not successful....but it should make the grains of salt taken with any talk of "well that was easy lets build 300k s.f. more without any pre-leasing" all the larger.
I have know idea how long the Sick Kids expansion was in the works but if it was a long time then, again, the MaRS leasing people might have cottoned on to the fact they were no more than a temporary tenant.
Well, it's not like any of this is secret - the rezoning and other processes are all public. My suspicion is that at the end of the day they probably gambled that whatever space they build can be retooled and get absorbed by demands from public institutions (e.g. U of T, hospitals).
AoD
A gamble that no professional in real estate fiance would make. Even now, we have $309 million out against a building that a one page letter from an accountant says is worth around that......what is the cost of this retooling to get tenants in? Why would you pay out $65 million to the equity partner when this level of uncertainty is in play? After leasing the phase I building (on, it now appears, a somewhat shaky basis what market studies indicated you should go ahead with a phase II on a spec basis? (see, some of the information is a bit more secret than you think).
I am not say it is right or wrong - what I am suggesting is that this roundabout way might be a mechanism for getting space that other public/quasi-public partners wanted built under what is ostensibly a P3 scheme aimed at private sector tenants. Note that the original anchors for Mars II are all public (PHO and OICR) to start off with.
AoD
Wait, what, are you suggesting this might have been intentional to get more space into the hands of a government that is, ostensibly, looking for real estate to sell? That makes it better somehow?
Note I said - 1. I am not say it is right or wrong and
2. having real estate to sell doesn't mean that you avoid purchasing real estate where need exist (though I don't consider this much empty space to speak particularly well of my fanciful scenario either). Anyways, I think I will move this part of the convo back to MaRS instead of this PMH thread.