Building during pandemic pays off for new airport hotel

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Regal Plaza Construction which began in the fall of 2020 has reached the second floor.Wallace Immen

Two years ago, as Toronto reeled from the first wave of the pandemic, a development team armed with shovels and ceremonial jackhammers gathered in a parking lot near Pearson Airport to launch the start of construction of a combined office and hotel building.

“Now may not be the best time, but we are optimistic about the future,” predicted Ali Akman, president of Toronto-based SAMM Developments, at the Regal Plaza Corporate groundbreaking ceremony. Center, located at 600 Dixon Road. “We estimate that when this project opens in March 2023, COVID will be a distant memory and we will be back to normal.”

Fast forward two long years and strains of COVID-19 are still front and center, and pandemic-related delays have delayed the completion date by a year. But the bet to go ahead with the construction has paid off, says Mr. Akman.

Construction has reached the second floors and office suites in what will be an 11-story building are on the market for opening in 2024. Meanwhile, several other competing commercial developments in the airport area that have been announced shortly around the same time remained on hold.

“COVID has raised questions about the future of the traditional office,” as well as the hotel and hospitality sectors, says Stephen Holyday, councilor for Toronto’s Ward 2 Etobicoke Center and deputy mayor of the West Zone of Toronto. the city.

Many developers are apparently still waiting to see a firm recovery before revisiting projects, Holyday suggests. But there are signs of a steady recovery in commercial real estate, he adds.

Statistics released in July by the city’s Economic Development and Culture Division show that office occupancy continues to recover, although the average this summer is still only around 40% of pre- COVID.

However, “what is very interesting is the rebound of the hotel sector. Restaurant and bar receipts are currently above pre-pandemic levels and hotel occupancy levels are also recovering to figures close to 2019. And the hospitality sector has been among the hardest hit during the pandemic,” says Ms. .Holiday.

The new Regal Plaza Corporate Center office suites are expected to be completed by March 2023.SAMM Developments

Average hotel occupancy has rebounded strongly from around 40% last summer to more than 70% this summer, although it is still down from nearly 85% in 2019, according to statistics from the city.

Mr. Akman says he considered halting construction of Regal Plaza in the fall of 2020 when case numbers soared in a second wave of COVID-19 that led to a winter lockdown. “But we decided to go for it. If you think too much, you can think too much,” he says.

There were some advantages to working on the narrow 4.7-acre lot (there are only a few meters between the new building and the existing Holiday Inn) while others sat apart, says Sajed Rahaman, owner of Regal Plaza Inc., who is managing the project.

The significant drop in hotel occupancy during the closings in late 2020 and early 2021 meant that guests of the Holiday Inn, which remained open, could be located in a wing of the hotel, away from the noise from excavation, shoring and concreting work.

All the work was done outdoors, enforcing the distancing rules for the crew was relatively straightforward and there were no outbreaks among the crews, Mr Rahaman says.

A current labor shortage hasn’t affected construction as there are fewer projects in the area competing for tradespeople (although construction union strikes this spring have delayed some of that). ) and, so far, the company has successfully coped with the industry-wide shortage. of concrete. “We are very lucky because we contracted with a local company to prioritize the project,” says Akman.

A few setbacks in the schedule were directly due to the pandemic shutdowns, such as delays in completing permit applications due to a shortage of city staff, Rahaman says — but now all permits are in place. Additionally, the project’s mechanical and architectural planners had to close their offices, which delayed the completion of technical specifications.

But some issues were unrelated to COVID-19. When excavation work began, it became apparent that the water table in Toronto was much higher than normal due to above-average rainfall over the past few years, Rahaman says.

“We had to set up a pumping system to prevent water from seeping into the site during the foundation work. The pumps also required a backup generator in the event of a city power outage. »

Luckily, there was a significant slack built into the $104 million budget for delays and situations like this, and the project is on budget, he adds.

As most of the contractors had worked with SAMM Developments on previous projects, says Akman, “we were lucky that they cooperated and kept their prices the same.”

With sales opening, Akman believes the 150 small office condos should be attractive despite a still volatile office market. Office suites average 800 to 1,200 square feet, but can be combined into larger units. “Many small and medium-sized businesses find an office condo to be a solid investment, offering them far more stability and versatility than renting office space typically offers,” says Akman.

The top seven floors of the building include a 204-room Staybridge Suites hotel, InterContinental Hotels & Resorts’ upscale extended-stay brand designed to appeal to business travelers working remotely.

Staybridge and the existing Holiday Inn-branded hotel — part of the complex — offer 24-hour shuttle service to the airport and a ground-floor shopping arcade and restaurant.

“We are in the market while other projects are still in planning and [we are] over budget when they face additional costs,” says Akman. “It gives us a head start in what we hope will be a strong recovery.”

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