Navigating The Office Apocalyspe

On today’s show we are talking about an office turnaround that can serve as a powerful lesson for all investors. 

This is a single office building in downtown Toronto, 70 York Street, and why its turnaround is one of the most practical case studies we have for navigating what many are calling the office apocalypse.

It’s a story about control, execution, and the discipline to create certainty in an uncertain market.

Let me set the stage. 70 York is a 17-storey office building of roughly 210,000 square feet, connected to the PATH system, a well located asset in Toronto’s core. It’s not a brand new glass tower, it’s a mid-80s vintage building with the kind of fundamentals that can still work, if you can get the leasing right. And then it lost its anchor tenant, HSBC.

When a building is empty, it’s tempting to cut rent to fill space. But cutting rent is not the only lever, and it’s often the most destructive lever. What you want is durable tenancy, credit quality, and term length.

The reported 6.8-year average lease term tells you KingSett pursued durable income. That matters for refinancing. It matters for valuation. And it matters for the eventual buyer.

Which brings us to the exit.

The building was sold off-market to Desjardins Global Asset Management and the Desjardins Group Pension Fund for about $134.6 million, reported at roughly a 6.5 percent cap rate and about $639 per square foot.

In a world where office transactions are scarce, and capital is cautious, an off-market institutional sale tells you something. It tells you that stability, even in an office market, still has a buyer.

But notice the order of operations. They didn’t sell a vision. They sold certainty.

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