DON MILLS & YORK MILLS DISTRICT PROFILE
February 28th, 2019
Today, I would like to share a fantastic opportunity at a property with stable income and the ability to significantly enhance future value.
A unique aspect of this offering is that the strong and growing contractual cash-flow will enable investors to capitalize on rising market rental rates through renewal or re-leasing upon expiry.
Furthermore, there is the potential to redevelop this site and significantly increase density.
I will get to the full details in just a moment, but first…
Before I reveal it, I would like to take a step back and first examine the pocket in which this building lies – the Don Mills District.
Market Stats and Trends Analysis
Overall availability in the downtown Toronto office market fell steadily each quarter of 2018, closing the year at an incredible low of 1.9%. The lion’s share of this outstanding growth took place in the fringe markets surrounding the core.
However, with space options running out in the fringe, the financial core reaped the benefits and availability plummeted to a record low of 2.4%.
Not surprisingly, rising rental rates was a huge part of the 2018 narrative. Occupiers considering renewal or relocation options experienced sticker shock. Rental rates in downtown Class A buildings skyrocketed by an average 16.7% through the year ̶ the biggest annual increase in almost 20 years.
Bolstered by lower-than-expected interest rates and an exploding tech sector, domestic and international companies will be seeking space that is virtually nonexistent through 2019. In such tight conditions, rising rental rates will remain a stark reality for tenants on the street.
GTA Office Stats Q4 2018 – Credit: Cushman & Wakefield ULC
Toronto Office Market Highlights
As per Altus Research, only about 650,000 SF of new office space was added to the Greater Toronto Area office leasing market in 2018 – the lowest level since 2003. At the same time, absorption of office space (based on changes in occupied space) increased to 3.9 million SF, its strongest level since 2006. The combination of reduced new supply and stronger absorption drove the overall office vacancy rate down for the 2nd year in a row, to its lowest level in over 10 years.
Toronto Midtown Office Availability and Vacancy Rate
Toronto Midtown Office Availability and Vacancy Rate – Credit: Cushman & Wakefield ULC
Don Mills & York Mills Office Market Trends
Leasing demand in the Don Mills & York Mills area for flex office space remains strong, as indicated by the recent absorption of:
- 46,000 SF of LEED Gold office space at 31 Scarsdale Road,
- 56,000 SF at 60 Scarsdale, 45,000 SF at 41 Scarsdale Road, as well as
- 50% of the newly renovated 1 Duncan Mill Road.
A strong local user base has driven rental rate growth across all asset classes over the past decade.
Don Mills & York Mills Market Recent Sale Transactions
These are some of the recent sale transactions in Don Mills and York Mills area.
Investors and users have purchased a number of sites which are being developed at this moment. We see a number of conversions from office to self-storage, from industrial to retail and flex office as well as a proposal to develop a mixed-use property, self-storage, office, and retail all in one.
It is my opinion that values will continue to increase under the pressure of low vacancy rates and great demand.
DON MILLS & YORK MILLS DISTRICT PROFILE – FEATURE PROPERTY!
FLEX OFFICE & TECH PROPERTY FULLY LEASED WITH VALUE ADD POTENTIAL
25 Dyas Road, Toronto
25 Dyas Road, Toronto
The property located at 25 Dyas Road is a single storey, 74,717 SF flex office building. The lot size of 4.13 acres enables generous parking for a total of 214 spots. It is fully leased to Imagine Communications Canada Ltd.
The main features are a:
- Single storey flex office building,
- low additional rent structure,
- stable cash flow in place,
- historically low vacancy rates,
- proximity to improving transit infrastructure investment including the Eglinton LRT line,
- close proximity to Don Valley Parkway and Hwy #401, and it is
- fully leased to Imagine Communications Canada Ltd. – a technology company specializing in innovative future proof, multi-screen video and ad management solutions for broadcasters, networks, video service providers and enterprises around the world.
25 Dyas Road, Toronto Floor Plan
ZONING
25 Dyas Road is one of the few properties that lie within the Lesmill Employment Zone but is not restricted under E1.0. With the EO1.5 zoning, the Property is subject to greater potential office density of up to approximately 270,000 square feet.
EO ZONING PERMITTED USES:
(A) The following uses are permitted under the letter “e” in the zone label referred to in regulation 60.40.1.10(3)(A)(i)
▸ Ambulance Depot
▸ Animal Shelter
▸ Artist Studio
▸ Bindery
▸ Carpenter’s Shop
▸ Cold Storage
▸ Custom Workshop
▸ Dry Cleaning or Laundry Plant
▸ Fire Hall
▸ Industrial Sales and
▸ Service Use
▸ Laboratory
▸ Police Station
▸ Printing Establishment
▸ Production Studio
▸ Self-storage Warehouse
▸ Service Shop
▸ Veterinary Hospital
▸ Warehouse
▸ Wholesaling Use
(B) The following uses are permitted under the letter “o” in the zone label referred to in regulation 60.40.1.10(3)(A)(ii):
▸ Art Gallery
▸ Automated Banking Machine
▸ Club
▸ Community Centre
▸ Education Use
▸ Financial Institution
▸ Library
▸ Massage Therapy
▸ Medical Office
▸ Museum
▸ Office
▸ Park
▸ Passenger Terminal
▸ Performing Arts Studio
▸ Software Development and Processing
▸ Wellness Centre
25 Dyas Road, Toronto Zoning Map
TRANSPORTATION
The Property is located within walking distance to TTC transit route #95 which travels east and west along York Mills Road. The westbound route provides direct access to the Yonge-University–Spadina Subway line and an immediate transfer to GO Bus transit routes traveling north, west, and east of the city.
Less than 2 minutes away via eastbound transit is the intersection of Don Mills Road, where TTC route #25 (Don Mills) is attainable and provides commuters with easy access to Pape Station on the Bloor-Danforth Subway Line. The Property sits approximately 2 kilometers west of the Don Valley Parkway and 4 kilometers south of Highway 401 at Leslie Street, providing quick and easy access routes to the Downtown core. Additionally, the Property is positioned just west of the future Downtown Relief Line.
25 Dyas Road, Toronto, Transportation Map
THE OPPORTUNITY
The property at 25 Dyas Road offers potential purchasers stable income with the ability to significantly enhance future value. Strong and growing contractual cash-flow will enable investors to capitalize on rising market rental rates through renewal or re-leasing upon expiry.
Long term, the 4.13-acre site is poised to benefit from a continued land appreciation and possible intensification opportunities in a rapidly improving commercial node. The Property’s low operating cost structure – in a market with historically low vacancies – coupled with its proximity to improving transportation infrastructure further highlights the long-term attractiveness of the Offering.
As per the vendor’s request, we are calling for offers on or before 5PM on Wednesday, March 6th, 2019.
Interested parties – please call for more information and direction.
CONCLUSION
As core Toronto locations are facing increased scarcity and growing demand for high-quality office and industrial opportunities, it is getting harder and harder to acquire almost any kind of real estate asset.
Don Mills and York Mills area is going through an unprecedented transformation. Industrial and obsolete office buildings are being converted to modern flex office space, high-end self-storage buildings, and entire communities with retail, commercial and recreational uses.
This is a unique opportunity to acquire a stabilized, flex office asset in the highly sought after Don Mills market, offering investors strong stable cash flow with the ability to add value over time.
If you are an investor searching for product (that you can’t find) or if you are looking to maximize value for your property please give us a call for a confidential consultation or for a complimentary opinion of value of your property.
Goran Brelih and his team have been servicing Investors and Occupiers of Industrial properties in Toronto Central and Toronto North markets for the past 25 years.
Goran Brelih is a Senior Vice President for Cushman & Wakefield ULC in the Greater Toronto Area.
Over the past 27 years, he has been involved in the lease or sale of approximately 25.7 million square feet of industrial space, valued in excess of $1.6 billion dollars while averaging between 40 and 50 transactions per year and achieving the highest level of sales, from the President’s Round Table to Top Ten in GTA and the National Top Ten.
Goran is currently serving as President of the SIOR ‐ Society of Industrial and Office Realtors, Central Canadian Chapter and on the Board of Directors of Muki Baum Accessibility Centre, a Toronto‐based NGO which provides support to children and adults with complex disabilities.
Specialties:
Industrial Real Estate Sales and Leasing, Investment Sales, Design Build and Land Development
About Cushman & Wakefield ULC.
Cushman & Wakefield is a leading global real estate services firm that delivers exceptional value by putting ideas into action for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 employees in approximately 400 offices and 70 countries. In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and project management, leasing, capital markets, advisory, and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
For more information on GTA Industrial Real Estate Market or to discuss how they can assist you with your real estate needs please contact Goran at 416-756-5456, email at goran.brelih@cushwake.com, or visit www.goranbrelih.com.
