The sale of the 60.5-acre Toronto Celestica campus property “is a once-in-a-decade type of deal” says one of the brokers who helped facilitate the transaction. That’s a good thing because it took more than a decade from the company’s first overtures to sell to actually close the acquisition.
“We just don’t have a large tract of employment and redevelopment land in the City of Toronto sitting on top of rapid transit with close proximity to downtown,” said CBRE Canada Land Services Group executive vice-president Mike Czestochowski, who brokered the sale with senior VP Lauren White, who first took on the account 10 years ago.
The site was obtained from Celestica by Aspen Ridge Homes, DG Group and Metrus Properties. The Concord, Ont.-based companies are part of Condrain Group, which is controlled by the De Gasperis family. The new ownership group declined an interview request from RENX.
Aspen Ridge Homes has completed 27 communities and has 13 others in various stages of planning and development. DG Group has been involved with planning and developing properties for more than 40 years. Metrus Properties was founded in 1972 and, since then, has accumulated a portfolio of more than 15 million square feet of industrial, retail and office space.
The Celestica campus site at the northwest corner of Eglinton Avenue East and Don Mills Road, which also includes a small parcel of land on the south side of Eglinton, is comprised of approximately 1.234 million square feet of office, manufacturing and warehouse space.
“Celestica was considering the sale because they wanted to move into more efficient space,” said Czestochowski. “Some of the buildings were older and, rather than retrofitting those buildings, they wanted to move into space that was modern and more efficient.”
Celestica campus site history
The first building on the site was constructed in 1951 and expanded in 1954. Another building was completed in 1967 and expanded in 1971. Both have been listed on the City of Toronto’s heritage register.
The site was previously home to IBM’s Canadian manufacturing plant. Celestica — a multi-national electronics manufacturing services company which is an offshoot of IBM — based its corporate headquarters, manufacturing and warehousing operations on the property until recently. Celestica has been a publicly traded company since 1998.
The Celestica campus site offers easy access to the Don Valley Parkway and the Eglinton Crosstown light rail transit line currently under construction. A mix of residential, office, retail and industrial developments, as well as the Ontario Science Centre, are in the area.
Czestochowski said DiamondCorp president and chief executive officer Steve Diamond, who was recently appointed the new chair of Waterfront Toronto, was instrumental in getting rezoning approved for the Celestica campus site to expand from employment use to mixed-use.
“It’s a unique situation when we have this,” Czestochowski said. “I would count myself lucky if we got this type of transaction once every five years. I think we’ll see fewer and fewer of them because these large tracts of redevelopment land just don’t exist.
“I have to commend the City of Toronto for seeing that and finding a way to have employment uses mixed in with residential, and taking advantage of rapid transit and making it a more vibrant area by having a mixed-use site. It’s very smart planning.”
Evolution of the transaction
Czestochowski said CBRE secured a successful bidder for the Celestica campus property in 2009 — about two years after the first reports surfaced that the company was looking to sell. However, the site owner put on the brakes to give itself more time to study its new space requirements.
“We stopped and we put it on the shelf and we re-pitched two or three years later,” Czestochowski explained. “We didn’t get the listing the second time.
“One of the banks did and was unsuccessful in coming to a price that Celestica was happy with. So, again, the property was shelved for a couple of years. In 2017, we were given the listing and went out and had multiple bids.
“Celestica chose to do a deal to take advantage of the zoning at a higher price. So, we did a deal that was conditional upon approval. That deal took two-and-a-half years or so to close.”
Plans for the Celestica site
Celestica officials didn’t immediately respond to RENX interview requests. However, its annual report disclosed the following about the campus site and the company’s plans:
“In anticipation of the sale, in November 2017, we entered into a long-term lease in the Greater Toronto Area for our new manufacturing operations. We completed this relocation in February 2019. As part of the sale, we will enter into a long-term lease for our new corporate headquarters on commercially reasonable arm’s-length terms.
“In connection therewith, we are relocating our corporate headquarters to a temporary location while space in a new office building (to be built by the purchaser of the property on the site of our current location) is under construction, and entered into a three-year lease for such temporary offices in September 2018.
“The temporary office relocation is currently expected to be completed by the end of the first half of 2019.”
Celestica’s manufacturing operations are now based in a facility at 213 Harry Walker Pkwy. S. in Newmarket, a GTA community just north of Toronto.
Celestica also issued a statement on March 11 that said it “received total proceeds of approximately $110 million US, including a high-density bonus and an early vacancy incentive related to the temporary relocation of the company’s corporate headquarters” for the Celestica campus site, which it fully owned.
Celestica’s head office will move into about 100,000 square feet in a new office tower to be built on the corner of Eglinton and Don Mills, according to Czestochowski. He said the tower will have approximately 100,000 more square feet to lease, preferably to larger tenants, and interest has already been expressed.
Czestochowski said at least one more office tower, along with ancillary retail, mixed-density housing and a community centre, will be built on the Celestica campus site. He added that, while CBRE wants to handle office and commercial leasing for the property, the new owners won’t make a decision on that front until they have a better idea of construction times.
Community plan submitted in 2018
A May 29, 2018 City of Toronto “Official Plan Amendment, Zoning By-law Amendment and Plan of Subdivision Applications – Request for Direction Report” outlined plans for a community called Wynford Green at the Celestica campus site that would include:
* 4.05 million square feet of residential uses comprised of 4,974 residential units proposed within buildings ranging in height from three- and four-storey townhouses, eight- to 10-storey mid-rise buildings and tall buildings with heights between 27 and 48 storeys;
* 276,848 square feet of affordable housing;
* 645,469 square feet of office uses within two buildings of eight and nine storeys;
* 119,684 square feet of commercial and retail uses along the Don Mills Road frontage and a new publicly accessible private street in the interior of the site;
* land to accommodate a 131,632-square-foot community centre;
* 24,014 square feet of community uses, including a not-for-profit childcare facility;
* a 5.58-acre public park at the northeast end and a 0.77-acre public park at the south end of the site adjacent to Eglinton;
* and an extension of Wynford Drive west and south through the site, along with a network of additional public streets.
RENX couldn’t confirm if all of these plans will be carried out as part of the Celestica campus site’s redevelopment by the new owners.
At least one website is already marketing condominiums for Wynford Green at the Celestica campus site.
“That’s not Metrus doing that,” said Czestochowski. “Overzealous residential real estate brokers take it upon themselves to take a rendering and throw it out there.”