One of Canada's most prominent intersections is getting a major facelift.
Developer Sam Mizrahi has bought several low-rise properties on the southwest corner of Toronto's Bloor and Yonge Streets, including the venerable Stollerys men's wear store for an estimated total of nearly $300-million. In their place, he plans to build a luxury condominium tower with space for high-profile international retailers on the main and lower levels.
Other residential towers with retail space are being developed at or near the busy intersection, among them a condo building by Great Gulf on the southeast corner across from Stollerys. Oxford Properties Group Inc. has a separate development on the drawing board for the north side of Bloor Street West, also with space for retailers.
"It's a very significant intersection," Mr. Mizrahi, president of Mizrahi Developments, said in an interview on Tuesday. "There's a significant moral responsibility for me to do this right. … We want to create an iconic building and iconic retail. This is the most significant corner in Toronto, if not Canada."
The makeover comes as upscale U.S. retailers such as Nordstrom and Saks Fifth Avenue are expanding rapidly into Canada, while luxury European players, including Christian Dior and Brunello Cucinelli, are looking to set up shop.
But the race to find space raises questions about whether the retail industry is becoming saturated.
"We've got too much [retail] supply in the city," Edwin Whaley, co-owner of Stollerys, which is closing its store in early 2015 after 114 years, said in an interview. "I'm not the only one concerned about it. If they're not concerned, they will be concerned down the road."
Mr. Whaley said he finally decided to sell his property to Mr. Mizrahi – after more than 30 developers from around the world had approached him over the past few years – because he is convinced that Mr. Mizrahi builds high-quality buildings and "not a piece of glass that's going to pop out down the road."
Mr. Whaley warned, nevertheless, that rising traffic congestion is keeping customers away and is a concern for retailers, which also face high rents and taxes on the posh Bloor Street shopping strip, dubbed the Mink Mile. And he said burgeoning competition has forced retailers like Stollerys to run constant sales, squeezing their profit.
Still, Arlin Markowitz, a vice-president at real estate specialist Cushman & Wakefield Ltd., said Italian luxe purveyors such as Cucinelli are still looking for retail space on Bloor Street.
He said he is finding interest among tenants for a couple of prominent spaces on the Mink Mile, including the store where jewellery retailer Tiffany & Co. was located before it moved across the street. As for traffic gridlock and a shortage of parking on Bloor, he's not worried, saying: "You can't park on Fifth Avenue in New York."
"There's been a retail renaissance in Toronto and Canada, generally, in the past few years," Mr. Markowitz said. "The condo development and downtown density are going to fuel the retail."
Rents along the Mink Mile, at $300 a square foot or more (excluding tax and other fees), are the highest in the country and more than twice those at most other retail locations, Mr. Markowitz said. Other pricey shopping strips include St. Catherine Street in Montreal and Robson Street in Vancouver, whose rents are $150 to $175 a square foot, and Toronto's Queen Street West, at $125 to $145.
Mr. Mizrahi said he will look for international retailers, such as the U.S. luxe chain Bloomingdale's, for the space in his new development at 1 Bloor St. West, which he calls "The One." He would also consider a high-end restaurant and supermarket emporium such as Italian-based Eataly, which draws big crowds in New York.
Mr. Mizrahi is no stranger to retail. He headed Dove Corp., a major dry cleaning and laundry chain, before moving into building luxury homes, starting with single homes in Toronto's tony Forest Hill neighbourhood and then as a condo developer in well-to-do Yorkville, near the Mink Mile.
He said he wants to customize a store to a retailer's specifications, with high ceilings and no columns to ensure a modern, open and airy setting, allowing shoppers to see different parts of the sales floor at once – in contrast to many existing retail spaces. His building will be connected to the underground path that leads to the Bloor and Yonge subways. It also will have underground parking with valet service, he said.
Oxford is still finalizing plans to redevelop its 2 Bloor St. West property with some residential units but "retail will definitely be a key component," said Michael Kitt, executive vice-president for Canada. "We continue to believe in the long-term strength of Yonge and Bloor, and this node in general," he said. "Our plans continue to be refined."