Crown Realty Partners has acquired The Sheridan Exchange, a two-building office complex in Mississauga, Ont., from Slate Office REIT for $25.6 million.

The 101,338-square-foot building at 2655 North Sheridan Way is 89 per cent leased, while 2695 North Sheridan Way spans 56,895 square feet and is 100 per cent leased.

“We like the location, the look and the feel,” Crown managing partner of acquisitions and leasing Scott Watson told RENX. “They don’t seem like typical suburban office buildings. 

“They’re low-rise in nature and a bit more friendly and welcoming as opposed to a six-, eight- or 10-storey square box. We’re finding that tenants are being drawn a little bit more to non-traditional buildings.”

Watson said vacancies at 2655 North Sheridan Way are in the 2,000- to 8,000-square-foot-range.

“We plan on implementing our model suites strategy over the next six months to get them into move-in-ready shape,” Watson noted.

Built in 1989, the complex sits on an 11-acre property.

Slate Office REIT announced in September that it will reposition its portfolio for long-term stability and performance, and to raise liquidity by selling non-core assets that comprise approximately 40 per cent of its gross leasable area. The Sheridan Exchange sale is part of that program, which is expected to continue through to 2025.

The Sheridan Exchange details

The Sheridan Exchange’s amenities include a fitness facility, a tenant lounge and underground and surface parking. 

Crown plans to improve the property over the next 12 to 15 months through revitalizing the common areas and main lobby, upgrading the exterior landscaping and introducing energy-efficient upgrades including LED lighting and mechanical systems. 

The Sheridan Exchange has a number of health-focused tenants, including EMD Serono Canada with about 30,000 square feet, CarePoint Health with about 25,000 square feet, and Mississauga Halton Home and Community Care Support Services with about 25,000 square feet.

The weighted average lease term for tenants in the complex is 3.6 years.

The Sheridan Exchange benefits from easy access to the Queen Elizabeth Way highway and nearby amenities including restaurants, hotels, bank branches and gas stations. There’s also a MiWay bus stop in front of the complex, which is surrounded by greenery and trails.

Crown Realty V LP fund

Toronto-based Crown is an integrated commercial real estate investment and management firm with a strong focus on value-add opportunities. It has more than 10 million square feet of real assets under management, including approximately 2.7 million square feet in Mississauga.

The Sheridan Exchange acquisition was the fourth for Crown’s fifth value-add fund, Crown Realty V Limited Partnership, which was created in 2021 with $260 million of capital committed from institutional investors.

The fund previously acquired: 

• the four-building, 415,000-square-foot Park of Commerce office complex on Blair Towers Place in suburban Ottawa in February 2022;
• a 50-acre property encompassing five office buildings and a retail bank branch totalling 1.2 million square feet in Mississauga’s Heartland Corporate Centre in April 2022;
• and a five-building, 205,251-square-foot small-bay industrial portfolio on Lancaster Road and Newmarket Street in the Ottawa East submarket in December 2023.

“We have greater than half the original equity amount remaining for opportunities,” said Watson, who added there are no plans at this point to begin raising capital for a sixth value-add fund.

Watson said Crown continues to look for and underwrite value-add office and small-bay industrial acquisition opportunities in and around Toronto and Ottawa.

Signs that office transaction market may be improving

While office transactions were down considerably last year in the Greater Toronto Area and across Canada, Watson is hopeful Crown’s latest acquisition could be an early sign of an improving market.

“Some of the unknowns are becoming a bit more known, but it’s still very challenging to underwrite office assets today,” Watson said, adding he believes the office market is at or close to the bottom of its current cycle.

“Without any trades or comparisons, it’s impossible to get approvals from boards and investment committees. More activity will breed further activity.”

Watson said office property valuations have dropped, bid-ask spreads have narrowed, financing has come back better than expected and tenant momentum has improved over the past 12 to 18 months, which are all positive indicators.

“We would love to be more active this year than last year and it wasn’t for a lack of trying last year,” Watson concluded.