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

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

“It may not be the best time now, but we are optimistic about the future,” predicted Ali Akman, president of Toronto-based SAMM Developments, at the breaking ground ceremony of the Regal Plaza Corporate Centre, 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 top of mind, and pandemic-related delays have set back the completion date by a year. But the gamble to push ahead with construction has paid off, Mr. Akman says.

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

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

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

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

However, “what is very interesting is the rebound in the hospitality sector. Restaurant and bar receipts are currently above prepandemic levels and hotel occupancy levels area also creeping back up to near 2019 numbers. And the hospitality sector was among the most hit during the pandemic,” Mr. Holyday says.

The office suites for the new Regal Plaza Corporate Centre are expected to be finished by March 2023.SAMM Developments

Average hotel occupancy has rebounded strongly, from around 40 per cent last summer to over 70 per cent this summer, although still down from nearly 85 per cent in 2019, the city statistics show.

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

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

The significant slump in hotel occupancies during lockdowns in late 2020 and early 2021 meant guests at the Holiday Inn, which remained open, could be located in a wing of the hotel away from the noise of excavation, shoring and concrete work.

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

A current labour shortage has not affected construction because there are fewer projects in the area competing for tradespeople (although construction union strikes this spring did delay some of it), and, so far, the company has managed to deal with the industry-wide shortage of concrete. “We are very lucky because we contracted with a local company to give the project priority,” says Mr. Akman.

A few setbacks to the timeline were directly due to pandemic lockdowns, such as lags in completing permit applications because of a city staff shortage, Mr. Rahaman says – but now all permits are in place. As well, the mechanical and architectural planners on the project had office lockdowns which delayed completion of technical specifications.

But some snags were not COVID-19-related. When excavation began, it became apparent that the water table in Toronto was much higher than normal because of above average precipitation in recent years, Mr. Rahaman says.

“We had to set up a pumping system to prevent water seeping into the site during foundation work. The pumps also required a backup generator in case the city power failed.”

Fortunately, there was a significant margin built into the $104-million budget for delays and situations like this, and the project remains on budget, he adds.

As most of the contractors had worked with SAMM Developments on previous projects, Mr. Akman says, “we were fortunate they co-operated and kept their prices the same.”

With sales now opening, Mr. Akman believes the 150 small office condos should be attractive despite a still-unsettled office market. The office suites average 800 to 1,200 square feet but can be combined into larger units. “Many small and medium businesses find that an office condo is a solid investment, allowing them much more stability and versatility than renting office space typically provides,” Mr Akman explains.

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

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

“We are on the market when other projects are still in planning and [we are] on budget when they are facing extra costs,” says Mr. Akman. “That puts us ahead in what we hope will be a strong recovery.”