Steve Ladurantaye

Four Seasons Toronto

Luxury has a new price tag.

The 55th-floor penthouse of the new Four Seasons Hotel and Private Residences Toronto has been sold for $28-million, the highest price ever fetched for a Canadian condominium. The buyer – who made the company sign a non-disclosure agreement – is from out of the country.

Read the story in the Globe and Mail

At about $3,000 a square foot, the 9,038-square-foot penthouse is a relative bargain by international standards. In New York, for example, a comparable property would hit the market at $5,000 a square foot.

Four Seasons penthouse, not quite ready.

“There’s more demand than you would think for properties in this price range and the buyers come from all over the world,” said Michael Braun, a Vancouver-based agent at Rennie & Associates Realty. “You’re not talking about investors at this price – these are people who want a unique place to live.”

The previous national sales record was held by Vancouver’s Three Harbour Green, which sold for $22-million last year, or $2,300 per square foot.

The Four Seasons sale impressed even the most seasoned market watchers, although it is associated with one of the most luxurious hotel chains in the world. Isadore Sharp founded the company in Toronto in 1960, and expanded it into a global icon renowned for its customer service with more than 84 hotels in 34 countries.

Four Seasons penthouse, facing south.

Even so, $28-million is a lot of money for a condo, which comes with a 680-square-foot staff residence. But when it went on the market two years ago, the asking price was $30-million.

“For the same price as that penthouse, someone could buy an eight-storey office building in the city,” said George Carras, president of RealNet Canada, which tracks the condo market in several Canadian cities. “Or a 14-storey apartment building. Or, 63 average-priced condos.”

The sale isn’t likely to wreak havoc in the broader market, because the new owner is essentially buying an entire floor of a Four Seasons hotel. The owner, and all other residents, can use all of the hotel’s amenities, including room service and housekeeping. It all comes at a price: Condo fees are close to $7,000 a month.

Four Seasons penthouse, facing west.

The taller of the project’s two towers contains 253 hotel suites, with 100 condos built atop. There is a 110-unit condo next door, and 85 per cent of the units are sold despite prices starting at about $1.9-million for a 1,000-square-foot unit.

“The penthouse gets the press, but the nuts and bolts of success is actually selling the other inventory,” said Scott Woroch, executive vice-president of worldwide development for Four Seasons. “It’s a great vote of confidence in this project specifically and the global brand in general.”

Canada’s real estate market has attracted investors from around the world since the recession, as buyers look to invest in properties that will retain their value.

It’s estimated that as much as 60 per cent of new condo sales in Toronto are to investors who plan to rent them out. The average selling price is about $520 a square foot, according to data compiled by condo tracker Urbanation.

Four Seasons penthouse, facing, er, down.

Anyone disappointed that they didn’t get to buy atop the Four Seasons might consider the penthouse atop Vancouver’s Shaw Tower, which is on the market for $19.5-million.

They could also look down the road to the planned Aura development in Toronto by Canderel, which at 75-storeys will be the tallest in Canada. Its penthouse is on the market for $17.5-million.

“There are pockets of international buyers who are looking in Canada, and while this all sounds like a lot of money, to them this isn’t all that much,” said Riz Dhanji, a vice-president at Canderel. “Five years ago, these sorts of prices were incomprehensible. But now the buyers are out there and they are willing to pay.”

The most expensive home for sale in the country on Realtor.ca, which is maintained by the Canadian Real Estate Association, is a $27-million, 41,000-square-foot mansion in Montreal.

In fairness, not all Blockbuster Canada locations are closing. In fact, most are staying open while the receiver looks for a buyer. Here’s a list of all the Canadian outlets that were spared (at least for now).

The Competition Bureau is picking a fresh fight with the real estate industry, this time over how crucial market data is being kept away from consumers by the country’s largest real estate board.

The federal watchdog has launched a lawsuit against the Toronto Real Estate Board, arguing that it prevents brokers from sharing information with their customers over the Internet. The challenge is the latest salvo in the bureau’s battle with the nation’s real estate agents, who have come under increasing scrutiny as their commission-based payouts have grown along with the price of homes.

The Toronto board allows agents to provide their customers with all sorts of important data about a home that are not available on the public website Realtor.ca, such as the number of days a property has been on the market and previous selling prices. The information is essential for any home buyer, because it tells a deeper story about the local market and the home’s history than a simple listing.

While some of the country’s real estate boards have no problem with this, the Toronto board has resisted making the material available online, citing privacy concerns. Toronto agents are allowed to send the information via fax, hand it to the customer in person or zip off an e-mail.

Read the story (and hundreds of comments)  at the Globe and Mail

Some brokerages want to go further and set password-protected websites that would allow customers to access the data from their living rooms. But TREB won’t allow the brokerages to pull the data from the Multiple Listing Service that they need in order to fill the sites with information. In a court filing, the Competition Bureau argued that the policy stifles competition.

“The restrictions are a practice of anti-competitive acts, the purpose and effect of which is to discipline and exclude member brokers who use non-traditional methods,” the Competition Bureau’s court filing states. “If a broker does not abide by the restrictions, TREB can terminate the broker’s access to the TREB MLS system – and has done so.”

The filing refers to a 2007 decision by the board to deny access to a brokerage after it downloaded listings from the MLS server to provide to its customers on a password-protected site.

Competition Commissioner Melanie Aitken said that decision has scared other brokers away from attempting to set up similar services. If those services were allowed, it would mean “their customers could conduct their own searches for information relevant to the purchase and sale of homes in the GTA without the personal assistance or direct intervention of a broker.” This could lead to “significant savings” for consumers, she said.

“This is simply about allowing consumers to gain access to information in innovative ways rather than the traditional way,” Ms. Aitken said. “We told them about our concerns and have talked to them since February, but we can’t let them continue to violate the act so we had to move.”

TREB sees it differently, arguing that having that information on a website that could be accessed by anyone with a password is an invasion of privacy. The association, which represents about 31,000 agents, has been working on a system that would allow such sites to operate, yet address privacy concerns, said Bill Johnston, the board’s president.

Mr. Johnston said he had met with Ms. Aitken’s “underlings” earlier this year and felt blindsided by the decision to go ahead with a case to the Competition Tribunal.

“We thought we were on the right track and then she threw us a curveball,” he said. “This smacks of career building on her part, and is a waste of taxpayers dollars. It’s a low blow that shouldn’t have happened, and I can see no other legitimate reason for doing this other than to grab headlines.”

The two sides can either come to an agreement, or meet at the Competition Tribunal – which has the power to impose a solution and issue fines.

The country’s real estate industry is made up of 101 individual boards, which are organized geographically. Each runs its own Multiple Listings Service, which all feed into the Realtor.ca site that is run by the Canadian Real Estate Association. They can set their own rules on how their data is used.

Other boards have allowed brokers to offer the information that TREB is denying its members.

Bill McMullin has invested “several million dollars” into Viewpoint.ca, a site that legally pulls data from the Nova Scotia boards and repackages it for its clients. He has taken it a step further, adding additional data sets that allow users to see information on things such as lot sizes and recent assessments.

“Everything you see on our site is made possible because we have access to that MLS data,” said Mr. McMullin, who wants to expand into Toronto but can’t get the data from the Toronto board.

This is the second time Ms. Aitken has taken aim at the real estate industry. Last year, she accused the real estate association of blocking its members from posting flat-fee listings, instead requiring consumers to hire an agent for the entire sales process if they wanted their house listed on MLS. That case led to a settlement that opened the door for flat-fee brokerages to list houses on the system.

The receiver tasked with selling Blockbuster Canada has released a list of the stores it will close as it prepares to bring the chain to market.

Grant Thornton Ltd. said the 146 stores – 66 in Ontario, 26 in British Columbia, 19 in Quebec, 15 in Alberta, 11 in Manitoba, 5 in Nova Scotia, three in New Brunswick and one in Prince Edward Island – will begin liquidating their stock in the coming weeks and will be closed by the end of June.

Closing Store List May 26, 2011

“As part of the consolidation process, Blockbuster Canada Co. will be conducting a clearance sale for a large portion of its movies and games inventory at savings of at least 30 per cent off regular prices. Clearance sales will be conducted at the stores being closed,” the receiver said in a release.

Gift cards won’t be accepted at any location that is set to close, the receiver said in a press release titled “Interest in Blockbuster Canada Co. remains strong.”

The video rental chain was pushed into receivership earlier this month after Hollywood movie studios called in $70-million in debt racked up by its parent company that had been secured against the Canadian operations.

While the U.S. chain was losing money as consumers opted for alternatives such as mail-order DVDs, mall kiosks and Internet services such as Netflix, the Canadian operations had $117-million in assets – including $15-million in cash – when pushed into receivership, according to documents filed this week by receiver Grant Thornton.

Blockbuster Canada is essentially being sold to service the U.S. debt, after its parent company was sold to Dish Networks earlier this month. The receivership puts the U.S. movie studios at the front of the line when the chain is eventually sold; anything left over will go to smaller suppliers that were caught off guard by the receivership.

The company is battling with its former U.S. parent over the right to use the Blockbuster name. The issue could be decided in a U.S. court in early June, when the receiver will ask that such decisions be left in the hands of the Canadian legal system.

It has proposed that the Canadian chain pay a 4 per cent licencing fee to keep its access to the company’s intellectual property that it has used since opening in 1990. The U.S. parent went bankrupt last year, and was eventually bought by Dish Network in a deal that closed earlier this month.

The race for Canadian retail space is on, with U.S. discounter Target Corp. (TGT-N49.410.050.10%) naming the first 105 Zellers stores it plans to convert to its own banner in the next two years.

Target’s bold step into this market has landlords scrambling to expand their shopping centres and build new ones to serve foreign retailers that want to set up shop here in the next few years. U.S. chains such as J. Crew and Nordstrom Inc. are attracted by Canadians’ appetite for shopping: Sales average $580 per square foot in Canada, while the U.S. market average is $309.

Read the story, written with Marina Strauss, at the Globe and Mail

But there’s only so much space to go around – which means if landlords want to accommodate everyone, they must either build more space, expand existing malls or squeeze out incumbent retail tenants.

“Even in the major enclosed malls, you’re seeing those landlords approve budgets of tens of millions – in some instances hundreds of millions of dollars – to expand and renovate,” said Jeffrey Berkowitz, president of retail real estate adviser Aurora Realty Consultants in Montreal. “The challenge is coming up with new space.”

On Thursday, the feeding frenzy was elevated as Target, the second-largest U.S. discount retailer after Wal-Mart Stores Inc., unveiled its first round of Zellers conversions to Target, with a second list to be announced in September. As a bonus to landlords, the cheap-chic U.S. chain, which bought rights to up to 220 Zellers stores in a $1.8-million deal with Hudson’s Bay Co., plans to spend up to $10-million renovating each store.

As an illustration of the appeal of Target to developers, Primaris Retail Real Estate Investment Trust this week clinched a $572-million deal to buy five shopping malls from Ivanhoe Cambridge when it got confirmation the Zellers stores in four of the properties would be converted to Target.

Target negotiated with 22 Canadian landlords individually – from national heavyweight RioCan Real Estate Investment Trust with its 21 locations, to the University of Guelph and its single property. There were two things Target wouldn’t negotiate – it wanted leases that could stretch as long as 60 years with options, and it wanted to wipe out a provision in Zellers leases that saw the landlords receive a percentage of total sales.

Target’s vow to spend up to $10-million per store on renovations is a boon to landlords who were concerned they’d be asked to share costs. “We need to replace a roof at one site, but otherwise we’re not carrying any of those costs,” said Edward Sonshine, chief executive officer of RioCan. “As for percentage of rent, we never saw a dime from Zellers anyway.”

RioCan has also ensured that all its 21 sites will be converted into Target stores, something not all of the landlords can say. Target said that the “vast majority” of the sites would be converted, but that a few could be given over to other tenants or back to the landlord.

Mr. Sonshine said many of the company’s power centres have room to expand, and that a strong anchor tenant such as Target should draw enough traffic to justify building more space for other retailers.

Ivanhoe Cambridge also expects its Target stores – it signed 14 leases – will boost sales at its shopping centres, said chief operating officer Claude Dion. The stores are expected to draw up to 50-per-cent more traffic than Zellers, making space that is traditionally difficult to lease easier to fill, he said.

Still, burgeoning demand from retailers will outstrip the supply of retail space, Rick Pennycooke, president of retail real estate consultancy Lakeshore Group, warned. Existing malls already are taking advantage of their tenants’ leases coming due, pushing them out in favour of new foreign retailers.

He said the heightened demand is forcing developers to find non-traditional space for retailers. For instance, RioCan is developing a former nightclub in downtown Toronto for U.S. discounter TJX Cos.’ Marshalls.

And U.S. retailers’ move north is benefiting landlords in other ways: Target plans to lease 180,000 square feet of space in Mississauga, Ont., in a building owned by the Healthcare of Ontario Pension Plan.

The building, in which Pepsi is also a tenant, is one of the most environmentally friendly spaces in Canada, with natural light flooding the workspaces and individual temperature control at each desk, said Lisa Lafave, the pension fund’s senior portfolio manager for real estate. “We also have stakes in several shopping centres that will be converted [to Target], and having something else replace Zellers will be very refreshing.”

Developers are also gearing up for new activity on the discount luxury front: RioCan and rival Calloway REIT have both teamed with U.S. developers to build upscale outlet malls to attract even more U.S. retailers.