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Monday, September 21, 2015

The Airport Corporate Centre and the View From Above

By John Markle, Research Associate (Toronto)

The Airport Corporate Centre (ACC) has recently been considered one of the most highly coveted nodes in Toronto West. With more than 82% of the 4.7 million square feet (msf) that comprise the ACC being class A office space, the ACC is also one of the most prestigious. Let’s take a look at some of the differentiators that set the ACC apart from other office nodes in the West right now.

It’s not that big

Sort of. The ACC—in geographic terms—is the smallest node in Toronto West, weighing in at a feisty 2.4 square kilometres, though representing—in office terms—the second-largest leasing node in Toronto West, bested only by mega-node Meadowvale. So why all the hubbub? Location is an obvious factor here. Sitting at the convergence of two major 400-series highways (401 & 427) and with proximity to three more (403, 410, & 409), the ACC stands alone in terms of connectivity (This Ignoring for a moment that it sits not even a whole thousand metres from the most heavily trafficked airport in Canada).

This is important. Traffic equals exposure; and though their stay was short, nobody could avoid stealing a glance at Target’s huge red lettering on the top floor of AeroCentre V while cruising along the 401, or Nissan’s sprawling office campus at 5290 Orbitor Drive down the street. Perhaps nowhere else in Toronto West can compete with the nearly 700,000 drivers that pass though this area on the 427 and 401 daily.  

Future Development

One of the key factors that sets the ACC apart from other nodes in Toronto West is the interest in building there right now. With 1.7 msf in preleasing stages, the ACC is primed for massive future development—mostly in the form of HOOPP’s ambitious 1.1msf Spectrum Square project. Once complete, Spectrum Square will comprise a seven-building campus that will bring much-needed amenities to the area.

Saddled by chronic parking woes and an historical lack of regional transit infrastructure, these developments will serve to heighten and enhance the desirability of the ACC over the next 10 years by attracting exactly the kind of amenities-driven development so desperately needed in that market right now. The process is already underway: Spectrum Square Phase I’s completion, in the second quarter of 2015, has brought with it a Starbucks and Teriyaki Express, not to mention the string of Bus Rapid Transit (BRT) stops reaching from Winston Churchill Boulevard in Mississauga to its terminus at Renforth Drive in Etobicoke.

To be fair, the BRT line was well underway even before Spectrum Square Phase I had even broken ground, though this is the building that will most immediately reap the benefits of the MiWay-serviced Spectrum Station, due to open in 2016 along with stations at Erin Mills, Winston Churchill, Tahoe, Etobicoke Creek, and Orbitor.

Cruising Business Class on the Flight to Quality

Tying in with the lead the ACC has in development is the recent trend in Toronto West for office tenants looking to upgrade their current workspace to modern, more efficient buildings that cater not only to tenants’ bottom line, but also enhance their employees’ satisfaction. As such, the ACC is currently the frontrunner in a three-horse race with Meadowvale and Oakville to reach 0% vacancy for new supply. With 54,000 sf leased to Investment Planning Council at Spectrum Square Phase I, current availability for the building (128,000 sf) now sits at 59%, compared with 81% in new Oakville deliveries (218,000 sf), and 100% availability for the two buildings delivered in Meadowvale (144,248 sf), which were also completed in the second quarter.

Of course, luck and timing are always important factors when evaluating events such as these, and it is important to consider the way certain pieces seemed to fall into place for the groups and buildings involved: Investment Planning Council wanted new, centrally located space; and PointClickCare (the other blockbuster deal of the second quarter) had been looking to expand for some time when 5050 Explorer Drive came on the market after Target’s departure, making both buildings natural contenders for these requirements.

These are but a few of the key factors that have allowed the ACC to maintain such a fierce competitive edge in Toronto West despite what seem like huge internal disruptions (i.e. Target/Citigroup departures), and why it is likely to remain a top contender in the race to zero in the months and years ahead.

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