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An artist’s rendering of T3 Sterling Road, a 420,000 square-foot office development in the Junction Triangle in Toronto’s West End. The complex, which will span three buildings, is set to begin construction this year.Courtesy of Hines/Handout

The operative word Hines Interests Ltd. Partnership is using to describe its new office project in Toronto’s Junction Triangle neighbourhood is “authentic,” but observers say it’s also a good example of a rapidly proliferating trend in commercial real estate – a move toward what is becoming known as the “fringe.”

The three-building development, on Sterling Road next to Henderson Brewing Co. and the Museum of Contemporary Art, is set to begin construction this year. The project is part of Houston-based Hines’s T3 concept, which uses heavy timber as the primary construction material. It will add 39,000 square metres of office space to the West Toronto area.

The company plans to begin marketing to potential tenants in a few months, with technology and creative firms the targets. Hines expects that the Junction Triangle area, combined with the nature of the building itself, will appeal to such companies.

“Their employees don’t want to be at King and Bay with a bunch of bankers in suits. That’s not the demographic they’re trying to attract,” says Syl Apps, managing director of Hines Canada. “They want to be in authentic neighbourhoods that are real and have some grit.”

The Junction and its environs – which includes the Junction Triangle – certainly fits that description. In its early history, the area thrived thanks to its numerous foundries, mills, meat packers and other industrial operations. But as manufacturing dried up in the 20th century, it went into decline.

Hines is marketing its large-scale mass timber office building on Sterling Road to technology and creative firms.Courtesy of Hines/Handout

The area has experienced significant revitalization since 2000, when the lifting of alcohol prohibition resulted in a host of bars and restaurants opening up along Dundas Street West, its main artery. Several travel publications have since referred to the Junction as Toronto’s “hippest” and “coolest” neighbourhood.

Commercial and residential development have followed. Aside from Hines’s T3 offices – which are part of a larger, 2.3-hectare plan that will include new public spaces and parks – Toronto-based developer Slate is also currently constructing a nine-storey condo building close by on Dundas.

Aside from the character of the neighbourhood, Mr. Apps says the Junction lives up to its name through a wealth of public-transit options. Two subway stops, three streetcar routes, a GO Transit station and the UP Express train to the airport and Union Station downtown are nearby, as is the West Toronto Railpath bicycle trail.

“That access is fundamental to how we get around the city, especially given how bad traffic has gotten in Toronto,” he says.

Market observers agree, saying that areas outside of central business districts that are also well connected via public transit are likely to see significant commercial development, including offices, in the near future.

That dynamic, along with changing work-force demographics, is causing a redefinition of what constitutes a city’s fringe. With many younger workers, especially in fields such as tech and creative, finding themselves in demand, the idea of commuting into the city from suburbs – the traditional fringe – is losing its appeal.

“Anything that is going to be located on or near transit is not going to be a trend, it’s going to be a sustainable long-term solution for landlords, occupiers and everyone in between,” says Daniel Holmes, senior managing director of the Toronto region office practice group for Colliers International.

“People are looking toward where they’re going to live first and where they’re going to work second.”

The fringe redefinition is happening across Canada, Mr. Holmes adds, with soaring downtown real estate costs causing many office and other commercial developers to look further afield, but still within their own cities.

Montreal, for example, has seen similar developments in neighbourhoods such as Mile End and, more recently, in nearby Mile Ex. In the south part of the city, Pointe-Saint-Charles has also been seeing gentrification in recent years, especially since Allied Properties REIT in 2016 acquired Le Nordelec, an older building that was turned into condos, retail space and offices.

Colin Worrell, managing director of Colliers’ Montreal office, says both Mile Ex and Pointe-Saint-Charles fit the same mould as the Junction in Toronto – they’re gritty, former industrial areas that are accessible by transit, which makes them especially appealing to younger demographics.

More importantly for the tenants renting the space, they’re cheaper locations for offices than downtown.

“All of that creates the perfect storm,” Mr. Worrell says. “Demand for space outside the core is very strong.”

French video game production company Ubisoft has been at the forefront of commercial development in both Montreal and Toronto, opening studios in Mile End and the Junction in 1997 and 2010, respectively.

The company purposely targeted fringe neighbourhoods in locating its studios, because of that perfect storm. Ubisoft Toronto managing director Alexandre Parizeau says the Junction’s transformation over the past 10 years has been amazing to experience.

“When we first opened, there was a nice creative energy in the Junction. It was an up-and-coming neighbourhood and rent was more affordable, so it was great for people working there to live close to the office,” he says. “There’s a ton of stuff happening, it’s very vibrant, lots of restaurants. It’s been great to see the neighbourhood grow and evolve over time.”