“Well, duh,” you say, and rightly so. There’s no mystery to this. And yet, we see, time and again, such projects become protracted and divisive affairs as developers battle city hall over restrictive official plans, and community groups and local residents take up arms to preserve the character of their neighbourhoods.
But sometimes, the stars do align, and the various stakeholder groups do get on the same page. It usually happens because a developer has a focus on the long-term, rather than maximizing profits in the near-term, and is willing to work with other stakeholder groups rather than in spite of them.
The catalyst for this can be a property or streetscape that has heritage value which makes it worthy of reinvestment. In this situation, simply bulldozing ramshackle buildings to clean the slate isn’t a palatable option.
Rebuilding history, a brick at a time
Take, for example, the historic St. Lawrence Market area of Toronto’s Market Street. Local developer Woodcliffe Landmark Properties had acquired over the past decade one 150-year-old building and two others that a previous developer had planned to demolish to make way for a new condo tower. The primary building, originally constructed as a hotel in 1858, had sat vacant for two decades after last serving as the location for a restaurant.
Restoration required all new mechanical, electrical, sewer and indoor plumbing systems, as well as new gas mains. Some floors had to be rebuilt, and the original brickwork that couldn’t be salvaged had to be replaced with a custom order from a British factory. The developer even split with the city the cost of ripping up the asphalt roadway and replacing it with brick paving.
In the end, the restoration cost about twice as much as building from scratch. It required the cooperation of the local BIA, and the city to provide the encroachment agreements needed to limit street parking to make way for outdoor patios.
The result is a unique heritage streetscape that features five restaurants, a coffee emporium and a specialty food store. A tired and derelict area of the city has been given a new lease on life without losing the distinct flavour of its rich history.
But most importantly, it’s become a highly desired address for which the developer says tenants will gladly pay a premium.
Creating a highly desired premium product
The story of Market Street is chronicled in a recent Globe and Mail story that also quoted Ross Moore of CBRE. He told the Globe that such restored heritage properties are often highly desired by young technology and new media companies looking for a hip location to call home. We’ve seen this trend in Ottawa, with many young tech firms taking to the ByWard Market area downtown rather than the business parks of the ’burbs.
That market demand is of course crucial. No matter how much a visionary developer may be able to rally the support of the community and city hall, if there isn’t money to be made at the end of the day, the redevelopment is a fool’s errand. In the case of Toronto’s Market Street, paying twice as much as building fresh from scratch looks like it will pay off.
In Ottawa and Gatineau, we have our own waterfront redevelopment project getting started, which stakeholders here hope will also pay off in spades.
Remaking Ottawa-Gatineau’s waterfront
Jonathan Westeinde and the team at Windmill Developments are winding their way through the approvals process to redevelop the 37 acres of land that includes Ottawa’s Albert and Chaudiere Islands, as well as part of Gatineau. This old Domtar paper mill site is largely shut off to the public. It’s a white elephant that requires environmental cleanup, but it holds the potential to anchor a dramatic revitalization of the downtown and create a dynamic waterfront scene neither Ottawa or Gatineau has ever experienced, while also honouring the history of the Ottawa River.
Windmill’s proposal calls for a variety of mixed-use buildings that will incorporate and preserve existing heritage structures, feature pedestrian-friendly streescapes, and be able to claim the title of “world’s most sustainable community.”
It’s a multi-billion project that could take 15 years to complete. But, amazingly, Windmill has been able to secure the support of three political entities that are often at odds with each other – the City of Ottawa, the City of Gatineau, and the National Capital Commission. Windmill has also been careful to engage with and accommodate the Aboriginal community in its plans, given the historical significance of the site to the Algonquin people.
Sometimes, old properties are best treated to a quick and merciful end courtesy of the wrecking ball. A clean slate is the best way to revitalize a community and put valuable real estate back to work. But other times, a little forethought and long-term, strategic thinking can yield a profitable way to make the old new again. Developers often see heritage properties and heritage designations as costly impediments to progress. They can, however, be the catalyst for some creative thinking that gives a cityscape something that is far more interesting to look upon, and commercially attractive, than another cookie-cutter condo tower.
To discuss this or any other valuation topic in the context of your property, please contact me at [email protected]. I am also interested in your feedback and suggestions for future articles.