TORONTO -- It took Douglas Matthews and his family, the descendants of wealthy 19th-century Toronto grain merchants, about 20 years and as much as $20-million to acquire land and a nondescript two-storey retail building at the busiest subway intersection in Canada.
Old money, but also patient money, was at work buying the southeast corner of Yonge and Bloor Streets in Toronto from seven different owners. It is one of the most prominent, underdeveloped sites in Canada.
The Matthews family (two brothers, a sister, spouses and a nephew) considered building an office tower on the site but backed off when the real estate market imploded in the early 1990s.
Now, the family owned Nastapoka LP is part of a joint venture proposing a $180-million, 60-storey condominium tower anchored by a five-story retail and multiplex cinema podium. The most distinguishing feature on the site today is a huge digital video screen on the roof of an otherwise forgettable building.
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Retailing consultant J.C. Williams Group of Toronto has been hired to scout for major U.S. and European retailers to lease space in the podium, which will likely include a concourse at the subway entrance level. Famous Players is negotiating to build and operate a 10-screen, 2,800-seat theatre on the upper two levels.
The Matthews family entered the wilds of big-city real estate acquisition as innocents. But they had enough smarts to recover their capital investment in the properties in 1988 by selling a 50-per-cent development interest to two partners -- Abak Estates Ltd. and Poplar Properties Ltd. Both are subsidiaries of the Calgary-based Canadian Pacific Railway's pension fund, which has assets of $5.3-billion.
Coincidentally, Piagga Ltd., a company controlled by Concord, Ont.-based developer Marco Muzzo, plans a 50-storey condo tower across Yonge Street on the site of the Uptown Theatre. The two projects could bring nearly $300-million of redevelopment to the intersection. Both projects are winding their way through the public consultation and municipal approvals process.
Briar de Lange of the Bloor-Yorkville Business Improvement Area, says: "We're definitely in favour of a redevelopment of the most important intersection in this country. It's been an eyesore for far too long."
This first major real estate venture for the Matthews family is on a scale that few developers, even seasoned ones, ever achieve. Mr. Matthews acknowledges paying between $15-million and $20-million for the corner building and a less than an acre of land.
"We acquired the properties bit by bit," he says, "although we're not real-estate people, and the owners knew we wanted to buy their properties."
They paid $54 a square foot for the first two properties on the Yonge Street frontage in 1969 when they were offered for sale by an executor of the estates that controlled them.
Next they acquired the corner property from book publisher Avie Bennett. After that, it turned into something of a cat-and-mouse game, with progressively higher prices, as the Matthews sought to buy out the other owners, including financier Lou Chesler. The owner of a restaurant, also on the Yonge Street frontage, held out on the price, but in the end the Matthews prevailed.
By the time they bought the last piece they paid "too much," Mr. Matthews said, but he declines to give details.
Before they can proceed, they must still buy the city-owned Roy's Lanes on two interior sides of the site. But the city is agreeable to closing the lanes and selling the property at fair market value because it favours the plan, he says.
Neil Munro, a partner in Young + Wright Architects Inc. of Toronto, whose firm designed the aborted office tower project in the late 1980s and has produced the new condo tower and podium design, says Mr. Matthews did most of the land assembly himself. Although he knows lots of lawyers, he operated by verbal agreement or a handshake. The Toronto-based Matthews entity that acquired the properties called itself Nastapoka LP, after a river on the east coast of Hudson Bay that Mr. Matthews and some friends sailed past about 40 years ago.
Once construction gets under way, likely next year, the Canadian Pacific partners will take over development.
"I have no skills in designing, building and making decisions on how a 60-storey building with all the complexities should be built," says Mr. Matthews, 78. "I'm old enough to know you don't get into something you don't know anything about."
He does know about entrepreneurship -- having explored for gas and oil, and drilled holes in Alberta's oil patch as an independent producer during the 1960s and 1970s, then running his own electronic and auto parts businesses. His last business fling was in the late sixties. "My brother-in-law and I bought and sold parcels of land on a speculative basis at Fort Saint John, B.C., on the route of a natural gas pipeline. It was an interesting play," he recalls.
Mr. Matthews set out on his own after working three years for the former Woods Gordon accounting firm in Toronto. He joined the firm after graduation from Harvard Business School in 1950. He had already received a degree in political science and economics from the University of Toronto's Trinity College and served for three years aboard Royal Canadian Navy frigates.
Tall and courtly, Mr. Matthews divides his time between an office in downtown Toronto and a farm near Collingwood, Ont. He can trace his family's lineage in North America to 1640. His father and uncle founded Canada Malting Co. Ltd. on Toronto's waterfront in the late 19th century and sold it in the 1930s to the Hiram-Walker/Hatch distillery family. Canada Malting became the country's second largest malted barley producer, with brewery, distillery and food manufacturer customers in North America and Britain.
Now there are predictions that this new Matthews project will have a profound effect on the Yonge-Bloor area.
Jamie Ziegel, vice-president and national director of Royal LePage Investment and Financial Services Inc. in Toronto, describes Bloor Street between Yonge and University as "centre ice" for the condominium market at the absolute highest end.
And Barry Lyon, whose market research consulting firm tracks condo developments in the Greater Toronto Area, says the project could turn the site into a landmark corner and a gateway to the Yorkville and Bloor neighbourhoods. It will also reinforce development east of Yonge, he says, and herald revitalization of Yonge south of Bloor.
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