Construction of Markham Ont.’s massive King Square commercial mall, billed as North America’s largest Asian mall, is back on track thanks to a fresh injection of capital funding.
The 340,000 square-foot, three-storey mall, just the first step in a planned three-phase development, was on hiatus for a few months until receiving a funding injection from Fortress Real Developments Inc. and non-bank lender Firm Capital Corp.
“We knew that to finish the project we would require traditional bank financing,” said Oswin Tong, planning manager for King Square Ltd. His group used mortgage broker OMJ Mortgage Capital to find backers and secured the involvement of Fortress and Firm Capital Corp., as well as Aviva, a deposit bonder, to provide the balance of the funding.
It is unclear how much the three parties have invested in total, but Fortress is upfront regarding its investment. “We have liked this deal from the start and have already injected $3.5M of our own capital into the site to get it going again,” Fortress COO Vince Petrozza said in a press release regarding the investment.
With the new funding, Varcon Construction restarted work at the beginning of the month on the King Square site, which is located on Woodbine Avenue just north of 16th Avenue in Markham, north of Toronto.
The groundwork on the mall has literally all been done: A cost consultant report from real consultants Altus Group found that $38 million work of work was finished by the time the basement was completed, all with no construction financing secured.
Retail condo units for sale
When completed in mid-2015, the King Square mall will be about 25 per cent larger than the current title holder for largest Asian shopping centre in the U.S. and Canada, namely the Pacific Mall in Markham, located to the east of the current project. The Pacific Mall, located on the site of what was formerly Cullen Country Barns, opened in 1997 and has 270,000 sq. ft. of retail space.
King Square aims to be bigger, better, and of course, newer. When completed, it will offer condo-style retail on its first floor, include a 25,000-sq.-ft. banquet hall and convention centre on its second floor, restaurants and a community centre. Offices and a medical centre will occupy the third floor. Construction costs for the giant mall were estimated at $86 million in 2012.
The King Square business plan depends on the mall’s owners selling off its condo units to retailers with the shopper centre’s backers retaining ownership of common areas and non-retail space. Tong, the planning manager, said the condo sales should fetch approximately $156 million with retail occupancy beginning in summer or fall 2015.
King Square is betting the mixed use project will prove to be a hit with Richmond Hill and Markham’s growing Asian population. “There are a lot of Chinese people there and Chinese people like to do business within the Chinese community,” he said.
Just the start
The giant mall, which will feature 2,500 indoor parking spaces, is expected to fill a role as a community gathering place for the quickly expanding bedroom community. Its massive first-floor lobby will be able to act as a performance stage and will accommodate seating for 500 people.
The developers plan to put a 3.5-acre roof garden on the top of the retail centre, which will be accessible to shoppers, plus numerous skylights.
King Square’s ambitious plans also call for follow-on phase 2 and phase 3 developments. Phase 2, which had an estimated construction cost of $92 million in 2012, will consist of an 11-storey Crowne Plaza hotel with two adjacent 11-storey long-term stay towers. Phase 3, estimated to cost $35 million in 2012, will house 100,000 square feet of above-ground retail facilities and two levels of underground parking.
Tong is unsure when work will commence on the later phases of the project. “The rezoning is taking longer than we expected. So much depends on the process of the city.”