Prime City Land Leased at Pennies on the Dollar
If only I had a time machine. The National Post recently revealed that some of the best deals in Toronto real estate belong to a few businesses who signed long term leases for city-owned land in the 1960s, 1970s and early 1980s. Now the city is trying desperately to get out of these agreements or somehow force these businesses to start paying current market rates.
Two shocking examples of the city's conundrum are 2 Bloor Street West and 2 Bloor Street East. The land that 2 Bloor Street West is sitting on is owned by the city and is being leased out for $112,000 a year or about $9,333 a month. 2 Bloor Street East is being leased out to HBC for a paltry $167,549 a year or $2.80 per square foot. Current market rates are at least 10 times these amounts.
When condos are selling across the street for $1000 per square foot and the oldest corporation in North America is leasing land at the same intersection for only $2.80 per square foot, something has got to give.
So what do you think the city should do? Bite the bullet and honor their 99 year leases even at these ridiculous rates, or should they do whatever they can to force the tenants to start paying market value for the land?
Andrew la Fleur is a registered real estate agent and regular contributor at blogTO.
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