[caltrane74]

From the Globe:

Brookfield sends eviction notices, files plans for Bay-Adelaide site

By ELIZABETH CHURCH

Thursday, December 15, 2005 Page B4

REAL ESTATE REPORTER

The race to be the first developer off the mark with a new Toronto office tower is heating up now that Brookfield Properties Corp. has notified tenants they must leave two older Bay Street buildings, and filed new plans for its Bay-Adelaide site.

The plans call for a three-building, mixed use project on the vacant site that would include condominium units, offices and a hotel.

The Brookfield property, with its partly completed elevator shaft, is a reminder of how quickly the bottom fell out of the office market at the end of the last cycle. Now, it appears the project may get a new life.

The plans show Brookfield would begin development with a proposed 62-storey office and residential tower at the corner of Bay and Adelaide streets. To make way for the tower, two small office buildings will be demolished. The facade of one of those buildings, built in the 1940s, will be preserved and incorporated into the new tower. The unfinished elevator shaft would also come down and an underground path would join the project to the Bank of Nova Scotia building to the south. "This is an exciting opportunity. We think the market is ready for a new building," Brookfield spokeswomen Melissa Coley said.

Tenants in the two buildings, bought by Brookfield in 2001 to give it a Bay Street address, have been told to be out no later than May.

Sources in the industry say at least three major tenants are shopping for space and it is believed Brookfield has secured one tenant for its new development.

The addition of residential units also makes the development more economical because condominium sales would help fill it.

"We are definitely going to see development in the downtown in 2006," predicted Paul Morse, head of leasing at Cushman & Wakefield LePage. A survey it released yesterday shows vacancy rates for prime space in the core edged down to 7.9 per cent in this quarter from 8 per cent in the previous quarter.

At least two other developers are in serious talks with tenants for new towers. Cadillac Fairview Corp. Ltd., an arm of Ontario Teachers Pension Plan Board, is said to be close to a deal with a major tenant for its site on Simcoe Street. Privately held Menkes Developments also is courting tenants for its proposed tower near the Air Canada Centre.