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The Downsview Park area in Toronto as seen on April 11, 2018.Deborah Baic/The Globe and Mail

The pension plan for federal public servants is getting into real estate development, hiring an executive from an established Canadian builder and creating a separate company to develop a sizable swath of land northwest of downtown Toronto.

Public Sector Pension Investment Board (PSP Investments) has set up a new company called Northcrest Developments to develop its 371 acres in Toronto’s Downsview area. The land is mostly vacant, except for Bombardier’s aircraft assembly site, which is due to move in 2023.

The land, which is accessible by Toronto’s subway system, is seen as prime real estate in a city grappling with a shortage of housing and office space.

“This is one of the biggest city building opportunities in a generation,” said Chris Eby, Northcrest’s executive vice-president and a former chief of staff to Toronto Mayor John Tory.

Northcrest recently hired Derek Goring, a top developer from First Gulf Corp., who helped lead development of 38 acres of unused land east of Toronto’s financial district, which has since been purchased by Cadillac Fairview for $690-million. Mr. Goring has been named executive vice-president of development.

Mr. Eby said his team of five will spend the rest of this year talking to area residents, community groups, local politicians and businesses to come up with a new land use and development plan for the Downsview land.

“You have to get the right plan in place and you have to get buy-in for the plan,” Mr. Eby said.

Bombardier said in December it will vacate the property by the end of 2023, part of the deal brokered when PSP Investments bought the Downsview property from the aircraft maker for $825-million in 2018. Bombardier is moving its operations to a new facility at Toronto Pearson International Airport.

Mr. Eby said there is an opportunity to deliver investment returns to PSP Investments and support public policy goals of increasing housing supply.

However, the land is currently zoned for employment, not residential use.

“There is unquestionably an opportunity to revisit the land use,” Mr. Eby said. However, he said it was “too early in the process to lay out specific numbers” on residential, office and retail properties.

Mr. Tory has previously said that preserving employment lands was a priority and that his office’s policy, in the case of the Downsview property, would be to keep the current zoning.

Employment lands are taxed at a much higher rate, and they need fewer services than residential zones.

On Monday, however, Don Peat, a spokesman for the mayor, said large sites such as Downsview will “more than likely include a significant number of residential units, including affordable housing. The site has new transit infrastructure and the mayor supports transit-oriented development."

He said city staff are working with PSP Investments to determine the “right mix” of employment and housing for the site.

PSP Investments, which is also the investment arm of the pension plan for the Canadian Forces and the RCMP, is the fourth-largest pension fund in the country with $168-billion of net assets under management as of its annual report released last March.

PSP is the latest Canadian pension fund to launch a separate real estate company. British Columbia Investment Management Corp. created QuadReal in 2016. Ontario Municipal Employees Retirement System invests and develops real estate through Oxford Properties and the Ontario Teachers’ Pension Plan’s real estate company is Cadillac Fairview.

However, unlike the other pension funds’ real estate companies, Northcrest’s only mandate right now is to develop the Downsview property. It will not run PSP Investment’s $24-billion real estate portfolio, which includes investments in apartments in Canada and office buildings in Australia.

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