When is a major announcement about a lead tenant for a new development not really news? When the tenant turns out to be a big financial backer of the project.
That was the case this week when Menkes Developments Ltd. and Healthcare of Ontario Pension Plan (HOOPP), officially broke ground in Toronto on their office tower at One York Street. HOOPP intends to occupy about 17% of the 35-storey, 800,000 square foot building, which is slated for completion in 2016.
That does not mean that the Menkes-HOOPP event did not generate some news.
First of all, the developers announced that the $375-million tower will seek LEED® Platinum certification, building upon the lessons that Menkes learned with the construction of 25 York St., the Telus headquarters just one block north.
One York builds on Menkes’ reputation as a south side pioneer. “We were the first developer to build an office building on the south side of Union Station, in what people call the south financial core, and that was a LEED Gold building,” said Peter Menkes, President of the Commercial/Industrial Division of Menkes.
One York glitters, but not gold
Aiming for Platinum status for One York is not expected to be that difficult, he added. “It amazes me, on 25 York we thought we would be 40% lower energy consumption but we’re closer to 60%.”
25 York may not have official Platinum LEED status but is not far off, which is remarkable considering it did not get any LEED credit at the time for being hooked into the Enwave deepwater cooling system, an energy-saving advantage that One York will also share.
Small details will push One York over the top with regard to LEED. “It is as little as offering more bike stalls and showers so that people bike to work,” said Menkes. The tower will also sport a solar power array on its roof and flywheel technology to reuse heat generated within the tower. “So we are hoping that our energy consumption might be 70% less rather than 60%.”
Menkes does not expect to have any difficulty filling One York St., despite the recent spurt of new office construction in the city. “We feel confident on the growth and plus the type of product it is, new technology, LEED Platinum, obviously there are buildings in the core – north of Union Station – that have tenants that want to be in new buildings.”
A PATH comes with it
One York is just one component of a massive, 2 million sq. ft. mixed-use development spread over two acres that includes a four-storey podium with approximately 200,000 square feet of retail space serving as the base of the tower. Menkes typically stays in as a managing partner in office developments, holding a 15% to 20% stake.
The office building is flanked by two residential condominium towers of 62 and 66 storeys that will share the retail podium. Menkes plans to provide more details on its retail and residential developments in a few months. (Oxford Properties is a partner in the condo development with Menkes).
The city intends to tear down the circular ramp from the Gardiner to York St. as well as the ramp that branches off and continues east to Bay St. It will mean downtown-destined commuters will descend from the Gardiner a little further west, a change that will hopefully make the area around the new Menkes tower less chaotic. “There is a bit of mayhem there at the corner of Lakeshore, Harbour and York St. when everybody is coming into the city.
That is all going to be removed and that area is going to be turned into a one-acre park,” said Menkes.
Removing those ramps will make York St. the main drag for pedestrians moving between the financial core and the waterfront, a prospect that Menkes is pretty happy about. “Us being at One York St., right in the middle between Union Station and the water, is a pivotal location.”
Mixed-use, intensification the Menkes’ plan
The Toronto developer is a big believer in the urban intensification trend that is evidenced by major tenants moving back to downtown office space, seeking to attract the skilled, younger workers living in nearby condo towers. “We really like the downtown market, we think the downtown office market doesn’t have to be right in the core per se, but there is great opportunity within the city downtown east and west because of intensification,” he said.
“We have seen some tenants actually migrating back in from the suburbs, Coca-Cola moved back into the city. Tenants like that in the Eighties moved out of the city because they wanted to be closer to their employees” and are again moving to be closer to their current and prospective employees, said Menkes.”
As a developer, Menkes has gone through a similar transition. Before its waterfront focus with 25 Yonge, the company’s concentration was to the north, specifically the downtown North York area centered on Yonge St. and the 401 Highway. A major office tower for the developer was 5000 Yonge completed in 2004. Prior to that, Menkes specialized in office towers in the Markham and Richmond Hill areas north of Toronto.
“We did those buildings when people were moving to the suburbs,” explained Menkes. “It is an interesting evolution. In the Eighties we had the migration to suburbia and built these suburban office buildings to be close to where people were living and then when the province put in their provincial policy, Places to Grow development guidelines, you started to see intensification in the city and we came back to build downtown office buildings and Yonge St. because that is where people were living.”