As Salvatore Iacono enters his second year as president and CEO of Cadillac Fairview he is focused on diversifying the commercial real estate assets of the firm, which has just undergone one of the most significant reorganizations in its history. 

Iacono succeeded John Sullivan as the head of Cadillac Fairview in late 2023, moving up from his post as executive vice-president of operations.

He reflected on the past 12 months in an interview with York University Development Corp. president and CEO Salima Rawji during PwC and Urban Land Institute Toronto’s Emerging Trends in Real Estate event at the Fairmont Royal York.

Two months after his promotion, the previously announced plan for Cadillac Fairview to focus exclusively on Canada -- while its Ontario Teachers’ Pension Plan (OTPP) parent took over the international portfolio via an in-house real estate asset group -- went into effect.

Cadillac Fairview now has $30 billion of assets under management through more than 36 million square feet of leasable space at 64 properties across Canada. It also has a land bank of more than 50 million square feet.

Cadillac Fairview's office and retail tradition

“We’re the largest office property owner and operator in downtown Toronto,” Iacono told Rawji. “On the retail side, we’re very well-known for being a major presence with our enclosed mall business. We now have 17 across the country. We've also been known, historically and currently, as being very active developers of both office and retail assets, and also in terms of condominium towers for the last 15 years.”

Cadillac Fairview’s priority is to become a more active investor, diversifying its Canadian portfolio by adding multifamily rental and industrial properties.

“We're having to recycle equity from existing assets and we are going through our portfolio and assessing which assets are non-core,” Iacono said. “We're going to continue some of those non-core sales over the next couple of years so that we can redeploy that equity into multifamily and industrial.”

At the same time, Cadillac Fairview doesn’t want to lose sight of operating its existing assets at a high level through maintaining occupancy levels, driving leasing growth and meeting the objectives of clients.

To that end, Marco Ding was hired as executive vice-president of investments in September after spending 18 years at CPP Investments. He oversees investment strategy and execution, growth and return on investments. 

Retail continues to do well

Iacono said Cadillac Fairview has “always driven incredibly successful results” from its retail operations as higher sales from tenants can translate into negotiating higher rents.

“There are some really positive signs from our retailers. They're still very much interested in continuing to do business with us and expanding with us and we’re getting really good re-leasing spreads on that.”

Iacono admitted he had concerns about the survival of brick-and-mortar retail at the height of COVID-19 lockdowns when there was a large spike in online shopping, but he said Cadillac Fairview’s retail portfolio is now performing better than ever.

The company learned a lesson from that experience, rethinking its portfolio composition and releasing some of the equity from its retail assets in order to diversify.

For example, Cadillac Fairview sold the 784,372-square-foot Champlain Place shopping centre in Dieppe, N.B. to Westcliff last month. 

Multifamily is a priority

Cadillac Fairview was one of Canada’s most active multifamily developers from the early 1970s to the mid-1980s, according to Iacono, and wants to return to those roots.

As current condominium projects are completed, and fewer new ones are started, Iacono is hopeful construction costs will come down since there will be fewer competing development opportunities for contractors. Cadillac Fairview could use that to its advantage.

“We should have more multifamily revenue, because currently we don't have any,” Iacono noted, “and what we've done over the last year is launched no less than three multifamily development projects.”

There’s a 510-unit apartment building underway at 750 Peel St. as part of Cadillac Fairview’s Quad Windsor district in downtown Montreal. It will include 207 underground parking stalls, a courtyard, wellness amenities, and co-working and meeting spaces when it’s slated for occupancy in 2026.

Construction is also underway on Rideau Registry, a 21-storey, 288-unit residential rental building integrated with CF Rideau Centre, Ottawa’s largest and busiest mall.

Ground was just broken on a major purpose-built rental project at CF Carrefour Laval in Greater Montreal. The first phase of this project comprises 365 units across two towers, featuring 20 and 11 floors, sharing a six-storey podium.

Iacono said Cadillac Fairview is also looking to acquire existing multi-family buildings “if we can get the right product at the right price.”

Industrial and office

Cadillac Fairview is developing a 132,000-square-foot industrial building with 36-foot clear heights, 172 parking stalls and 26 dock-level doors on an eight-acre site immediately west of Highway 404 and just north of highways 7 and 407 in Richmond Hill, north of Toronto. Initial occupancy is expected next year.

There are larger and longer-term development plans for Buttonville Industrial Park, a 169-acre site in nearby Markham, with access to several major transportation routes. 

At full buildout, according to Cadillac Fairview’s website, its current plan for the former airport property is to develop 2.8 million square feet of industrial space across 11 buildings. They would offer 40-foot clear heights and range from approximately 37,000 to approximately 816,000 square feet to accommodate a variety of tenants. 

“The economics for industrial development are a little bit challenging right now,” Iacono said. “There are probably some better deals on the acquisition side, so we're starting to look at potential transactions.”

Cadillac Fairview has an urban-focused office portfolio in Toronto, Vancouver, Montreal and Calgary. Iacono has experienced down cycles in the asset class before so, despite vacancy rates that have jumped substantially this decade, he feels things will improve over the next year or two.

“For those who can get through this stretch, there’s some leasing activity and touring activity that’s happening,” Iacono said, adding that more employers are now also mandating their employees to return to the office.