Anatomy of a $2-billion deal: Class A office towers meet bus terminal

The recently announced deal between Ivanho Cambridge and Metrolinx to build an iconic new bus terminal and office complex in the heart of Toronto was more than five years in the making.

Its origins stretch back to the time when the financial crisis was gaining legs. Thats when Ivanho Cambridge bought a parcel of land at 45 Bay St.

Ivanho Cambridge, the real estate arm of pension fund Caisse de dpt et placement du Qubec, is a property behemoth with more than $40-billion in assets. It wasnt quite sure what it wanted to do with the property it was acquiring at the foot of Bay Street. But it knew that Metrolinx was exploring options to create a new bus terminal in the southernmost part of the city.

Metrolinx is tasked with planning and improving transportation in the Toronto and Hamilton areas and runs GO Transit. At the time it was developing its mega-blueprint called The Big Move, which outlined a new way of moving people around the region.

When we looked around for the available [bus terminal] sites at that time, in about 2008-2009, there really was only one undeveloped site left that was in close proximity to Union Station and the Gardiner [Expressway] and Lakeshore Boulevard 45 Bay was that site, says Metrolinx president and CEO Bruce McCuaig. And it was owned by Ivanho Cambridge.

That means the blockbuster deal that was announced in September for the $2-billion project that includes the bus terminal and two office towers was first kindled more than five years ago, when Metrolinx knew it wanted to be on that site. So what took so long?

When Ivanho first bought 45 Bay St., which is currently being used as a parking lot, it was certain about only one thing whatever it built there would include office space.

Its a premier office location and really its the last opportunity to do a significant office development on Bay Street, says Paul Gleeson, Ivanhos executive vice-president of global development. So to go to an alternative land use, in our view, wouldnt have been the best decision.

We always knew it was going to be an office development, he adds. What we had to do was finalize our deal with Metrolinx. Its complex figuring out how to successfully integrate an operating bus terminal into a Class A office building.

Before the talks even started, Ivanho set about securing air rights above the railway tracks that run east-west between 45 and 141 Bay, which is the site of the Union Station Bus Terminal (there is also the Toronto Coach Terminal further north at Bay and Dundas Streets). With those rights in place Ivanho could begin to conceive of a project that used its property at 45 Bay and the bus terminal property at 141 Bay, connecting the two via the space above the railway tracks.

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Anatomy of a $2-billion deal: Class A office towers meet bus terminal