Canadian Lawyer

December/January 2021

The most widely read magazine for Canadian lawyers

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Page 30 of 43 29 example, tools such as FaceTime and Skype have been utilized by municipal building departments to confirm the completion of work. In so doing, government officials were able to perform vital functions remotely during the height of the lockdown. "This allowed municipal building depart- ments to close building permits that might have otherwise delayed or complicated the closing of real estate transactions." Two of the pandemic's hardest-hit sectors have been retail and hospitality," says Mario Paura, a partner in the Real Estate Group of Stikeman Elliott LLP in Toronto, with the latter hit hardest. At the same time, the retail sector may present good opportunities for new struc- tures and transactions. Before the pandemic, "we saw lots of examples of repositioning" shopping malls built in the 1970s and 1980s, such as Bayview Village and Galleria malls in Toronto and the Promenade in neighbouring Thornhill. These malls "historically had enclosed centres that were doing very, very well decades ago and are now being reposi- tioned for mixed-use, multipurpose facilities with residences, shopping and other public amenity space." QuadReal, the owner of Toronto's Cloverdale Mall, built in 1956, has proposed replacing the existing mall with a mixed-use development covering 32 acres, including parks and a community centre, while retaining the Cloverdale Mall name and its retail stores. COVID-19 may accelerate the repositioning of such real estate — main- taining retail but densifying sites, including for residential use — with the need for social distancing and consumer habits changing to reflect less in-person store shopping. "I think there were doubters of the trend to open-air malls," Paura says, which have included, as redevelopments, Toronto's Shops of Don Mills and Morningside Crossing. However, he adds, "I do think that is a trend, and COVID will reinforce that for lots of reasons." For one, with a greater trend to home shopping — as stores close and consumers are hesitant to venture out — the online retail sector will need to be accommodated in more warehouse space. "You can't turn a neighbourhood shopping mall into an indus- trial warehouse; residents wouldn't be happy about that," Paura adds. But large-format retailers and services, such as Amazon or Canada Post, needing warehouse-type spaces could become industrial distribution centres, allowing for online orders to be delivered to customers in a day or two. As for the future of office rental space, "none of us are in our downtown high-rise offices today," says Paura. Office building owners "are not desperate to sell at the moment" as valuations are lower now. "There may be pressure in future, if the long-term impact of COVID means less office space is needed," he adds. "We' ll see . . . increased vacancies in the short term, but I think the better view, medium to long term, is for things to get back to normal" as workers look to resume in-person office contact again. All this said, "we're still seeing new commercial leases being entered into, there's still market activity and the pandemic hasn't prevented things from getting done," says Gordon. With the use of technology, "there's no hard stop on doing things." "Members of the real estate bar need to think outside the box with respect to traditional due diligence and legal drafting." Ira Barkin, Goodmans LLP A SHIFTING REAL ESTATE MARKET COVID-19's effects on property leasing: Retail tenants are having difficulty in operating their businesses, including paying rent; Industrial properties are still in demand; The commercial leasing bar has helped both tenant and landlord clients manage the government's commercial rent assistance programs, which require significant decreases in revenue as a condition of application.

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