Toronto — Vancouver developer Ian Gillespie has some grand plans for Toronto. As an outsider, he figures he sees something in the city that its residents maybe don't get. Sure Vancouver is a gateway to Asia, but Toronto, he says, is a financial hub that has an increasingly important role in doing business with emerging markets.
So at a time when most of the real estate world is fixated on the booming western market, this West Coast native has come east, placing a $430-million bet on the luxury tastes of Toronto and the long-term vibrancy of Ontario's economy.
"I'm not from Toronto but I see the potential of the city -- the infrastructure, the hospitals, the universities," Mr. Gillespie said during a visit this week to unveil his company's plans, a 65-storey hotel and condominium project to be managed by Hong Kong-based Shangri-La Hotels & Resorts.
Mr. Gillespie has made a name for himself in his home town with projects such as the redevelopment of the Woodward's property building in the troubled Lower Eastside and the Shaw Tower. His private company, Westbank Projects Corp., has developments in Victoria, Edmonton and Dallas. By September, he's planning to add Toronto to that list, breaking ground for the hotel and condo tower that will dominate the skyline on the city's grand thoroughfare, University Avenue. It's a street he believes is vastly underrated and one of the main reasons he's teamed up with Shangri-La Hotels for a Toronto location.
"It didn't take long to convince us," said Mr. Gillespie, who jumps back and forth in conversation between his business case and the finer points of design.
Less than two years ago, he had the chance to lock up the site on the west side of University Avenue at the corner of Adelaide Street.
"It's such an amazing and great street. There is no other street like it in Canada that even comes close."
Shangri-La executives, Mr. Gillespie said, had a similar reaction. Eager to expand beyond their home base in Asia, the hotel management company was already working in Vancouver on the first Shangri-La Hotel in North America with Westbank and Mr. Gillespie's partner Peterson Investment Group Inc.
Toronto, Mr. Gillespie said, was a natural second Canadian location because of its links to Asia and its role as a financial centre. Mr. Gillespie had worked before with Shangri-La's controlling shareholders, Hong Kong's Kuok family, and was scouting for locations. The property, a parking lot with an abandoned historic building in one corner, was brought to his attention by a local real estate broker. It sealed Shangri-La's expansion decision, he said. "We could not find a better site."
What Mr. Gillespie is planning to put on that parking lot is a twisting glass tower, the tallest residential building in the city. A curve in the street just at that corner means that from the south the building will appear to rise up from the middle of the boulevard. It will have 220 hotel rooms on the first 17 floors and 352 condominium units above.
The two penthouse units are expected to crack $10-million. The plush hotel suites will run about $500 for a single night.
Mr. Gillespie may feel he has a unique site, but he's far from alone in seeing Toronto's potential. The Shangri-La Hotel is one of three big-name five-star projects slated to hit the city's downtown in the next five years. Ritz-Carlton is building a 53-storey hotel and condo tower in the entertainment district. Four Seasons is working on a similar mixed-use project farther north in Yorkville. These three major projects, together with other plans, such as the proposed Trump Tower and smaller developments, could add as many as 1,000 luxury hotel suites in a city that has no five-star accommodation. That's left some wondering if all this rich living will be too much for the market to digest.
Mr. Gillespie says only time will tell. "It's not possible to do research to answer that question," he said. The decision to come to Toronto, he said, was not about the hotel market in the next five years. It's a call on the economy and the importance of the city over the next three decades or more given travel patterns and the rising power of the Asian market, where Shangri-La has its client base. "This is a long-term investment," he said.
In many ways, the luxury hotel building boom in Toronto says more about changing tastes in the high-end residential market than it does about the travel industry.
None of these projects would be happening without the condominium units that they include. Each Shangri-La room will cost about $750,000 to build, Mr. Gillespie estimates. There is no way the Toronto market could command the kinds of nightly rates required to justify those costs, he says.
Pairing condos with the hotel allows Westbank to spread its costs over a larger base. The bigger project helps carry the cost of shared amenities and spaces such as the gym, lobby and parking garage. Shangri-La has a long-term contract to manage the hotel, which will be owned by Mr. Gillespie and his partner. That link to an international luxury brand and the services offered by the hotel in turn makes the condo units more desirable, he says.
"You can't build a five-star hotel today without a significant residential component," he says. "The economics dictates the deal. It was generally recognized that there was a void, but you needed the developer and the capital to put it all together. Before now the residential part of the business case wasn't there."
The new entries, Mr. Gillespie argues, will benefit each other, just as desirable retailers do when they drive traffic by locating together. "I know this is going to sound self-serving, but I think all three of us will benefit from each other."
Ian Gillespie
Title: President, Westbank Projects
Age: 45
Born: Vancouver
Favourite job: "I don't think what I'm doing is a job, it's something I enjoy doing."
Education: University of British Columbia: bachelor of commerce, major in finance and urban land economics
University of Toronto: masters, business administration
Favourite building: Church of Light, located in a suburb of Osaka and designed by Japanese architect Tadao Ando
What he wants in a hotel: Great service, great gym, large shower.
© The Globe and Mail
