Hazelview Investments is best known for its involvement with purpose-built rental apartments, but it has been an equity partner with Hines in its T3 Sterling Road office project in Toronto for more than two years.
“Most of our development continues to focus around residential, but through our investment vehicles we invest alongside companies like Hines and other best-in-class developers, whether that be office or condominium projects,” Hazelview senior managing director and co-head of private real estate developments Michael Tsourounis told RENX.
Hines is a privately owned global real estate investment firm founded in 1957 with a presence in 240 cities in 27 countries. The Houston-headquartered company had more than 172.9 million square feet of assets under management valued at approximately $160.9 billion US at the end of 2020
Hines has developed, redeveloped or acquired approximately 1,450 properties totalling more than 485 million square feet. The firm has more than 180 developments underway around the world.
T3, which stands for “Timber, Transit and Technology,” is the second Toronto-based mass timber office project by Hines, following T3 Bayside. The first phase of that development will bring 251,000 square feet of office space to downtown’s eastern waterfront in early 2023.
What T3 Sterling Road offers
Construction started on the first two buildings at T3 Sterling Road in June. Upon completion, it will be a three-building, 415,000-square-foot urban campus west of the downtown core. The first two buildings are expected to be occupied and operational in 2023.
“Depending on the velocity of lease-up and interest in the market, we will make the decision on when the most appropriate time is to commence construction of the third building,” said Tsourounis.
“Hines has taken the lead as the developer with the city. We’re more of an equity partner, but we view it as potentially a very long-term asset for us to continue to hold in partnership with Hines.”
The DLR Group-designed project will include: social workspaces and tenant collaboration areas; rooftop terraces; private balconies on each floor; floor-to-ceiling warehouse windows to maximize natural light; a fitness centre; bicycle storage; and end-of-trip facilities.
T3 Sterling Road will implement technologies that reduce the risk of respiratory virus transmission throughout the workplace while meeting the highest post-COVID health and safety standards.
T3 Sterling Road has a WiredScore Gold certification and will include 5G capacity and advanced building systems.
The development has a Transit Score of 100 and is within walking distance of two Toronto Transit Commission subway stops, three streetcar routes, a GO Transit stop, an UP Express stop, the West Toronto Railpath and a proposed Bloor-Lansdowne SmartTrack station.
“It’s a pretty unique competitive advantage in being able to hop on the UP and get down to Union Station pretty quickly, and your cellphone works the entire time,” said Tsourounis.
Tsourounis called T3 Sterling Road a progressive and unique office complex offering desired brick-and-beam space in a modern building, which is difficult to find in Toronto.
While no space has been pre-leased to this point, Cushman & Wakefield has been retained and is talking to potential tenants. T3 Sterling Road is targeting knowledge industries such as technology, advertising, media and professional services, with independent retail on the ground floors.
Other Hazelview activities
Hazelview is an active investor, owner and manager of global real estate investments. It employs a global investment and asset management team of 80-plus in its Toronto, New York, Hong Kong and Hamburg offices and manages $9.9 billion in real estate assets.
“We have a pretty active residential pipeline across Canada, but mainly focused in the GTA, Ottawa and Halifax,” said Tsourounis.
“We feel there’s an excellent opportunity to be able to continue to add housing supply across Canada, especially as trends of immigration continue to be prevalent. As Canada continues to grow, we’ll need to add to the supply of housing. We’re looking at doing that through various rental projects.
“We have a development pipeline of over three million square feet at varying stages of production. We should be starting to deliver some assets in both Ottawa and Brampton over the next 24 months.
“We always hope to have a few assets entering stabilization, a few assets being constructed and a few assets going into planning and development at the same time so we have a continuous flow of new units being added over a 10- to 12-year period.”
Tsourounis highlighted two Hazelview purpose-built rental developments.
Construction began in October 2019 and will be completed within a year on a 31-storey, 265,000-square-foot, 272-unit apartment at 205 Queen St. E. in Brampton.
“That will be an amenity-forward, best-in-class rental building,” said Tsourounis.
Construction is expected to begin this year on a 38-storey, 300,000-square-foot, 336-unit apartment in the Yonge Street and Eglinton Avenue East area of Toronto at 73 Broadway Avenue.
Hazelview will build on what was a surface parking lot for an adjacent asset it already owns. The project is expected to take about 45 months to complete.
“A lot of our development program right now is focused on optimizing additional land that we have on some of our apartment sites,” said Tsourounis.
Hazelview’s vertically integrated structure
“We have a fully vertically integrated structure at Hazelview where we have development management, investment management and property management.
“We’re able to leverage our skills through design and development because we’ve been operating apartment buildings for 20-plus years.
“We have a lot of hands-on, boots-on-the-ground experience in running assets and know what works well and what doesn’t and how we can optimize design to overcome operational challenges.
“It is quite different building a condo building that would be for sale versus building a rental building that we intend to hold on to for a long time into the future. We really feel that’s one of our competitive advantages, especially when it comes to building rentals.”
Hazelview also has a handful of land assemblies it’s taking through rezoning to optimize density, according to Tsourounis.
It’s actively looking at acquiring more sites, mainly throughout the Greater Toronto Area, on which to build more rental housing.