London Inc. Weekly

Weekly Regional Business Intelligence

Written by Kieran Delamont, Associate Editor, London Inc.

Dundas Street project first to receive city OTR funds

The office-to-residential (OTR) project at 166 Dundas Street ― above the former Rexall ― is set to be the first to receive a municipal grant, the mayor announced on Thursday. Mississauga-based Maas Group, the developer behind the project, is going to receive just shy of $415,000 as part of the city’s Office-to-Residential CIP Incentive Program for its plans to build 14 two-bedroom apartments and one one-bedroom unit in the top three floors of the space (the first and second floors will be commercial space). The incentive program was a centrepiece of Mayor Josh Morgan’s housing initiatives announced at January’s State of the City address, and with commercial real estate still flagging in the core, it’s hoped that more will follow suit, despite persistent concerns from developers around the cost and feasibility of such conversions.

The upshot: Mayor Morgan’s spin on it was that it would be the first of many such conversions. “This represents so much more than just 15 units of housing,” he said. “It speaks to the beginning of the new downtown revitalization that is occurring. Investments like this signal that things are changing and people are willing to look at these buildings and invest in them and create both commercial and residential opportunities in the heart of our city.” There are, according to the city, other OTR proposals looking for city cash as well. One of those is assumed to be a $20-million Sifton project at 195 Dufferin Avenue, where the developer, working with Homes Unlimited and the Anglican Diocese of Huron, has plans convert the vacant office building into 94 residential units. There is currently $10 million sitting in the conversion fund, so there’s lots of money to be accessed by developers willing to take on these projects.

Read more: CTV News London | London Free Press

Death by endless shrimp?

Alas, your days of being able to head on down to Red Lobster on Wellington Road South (pictured) may be numbered, after the Florida-based company filed for bankruptcy in the U.S. over the weekend. There are 600 Red Lobster locations worldwide, including 27 in Canada, including the one in London. What is to become of the bulk of those locations is unclear ― Red Lobster has said it plans to close more stores (it’s already closed a number of units in the U.S.), sell the company to its creditors, and “pursue a sale of substantially all of its assets as a going concern.” Red Lobster has not said ― perhaps has not decided ― what to do with the Canadian locations yet, though CBC News reports an application will be brought before the Ontario Superior Court of Justice on May 28 to have the U.S. bankruptcy recognized and enforced in Canada.

The upshot: They lived by shrimp, and now it seems they may die by shrimp. Last year, the company staged an “Endless Shrimp” promotion, which offered (you guessed it) all-you-can-eat shrimp for $20. That move, in hindsight, appears to have been a disaster (just like it was in 2003 when they tried “Endless Crab”): the shrimp deal was very popular, but as their CFO put it, “we don’t earn a lot of money at $20.” The company was reportedly losing $11 million each quarter on the tiny backs of tiny (and apparently very tasty) shrimps. All of which is to say, if you’re a fan of London’s only Red Lobster, our advice would be to hop in the car and go now ― the endless shrimp may turn out not to be so endless after all.

Read more: CBC News | Storeys

London bucks slowing national home construction on strength of apartment sector

On the national and provincial fronts, housing starts are not looking good: this week, Canada Mortgage and Housing Corporation (CMHC) data showed that in April Ontario’s housing starts had dropped to 2018 levels, down 37 per cent from last year, amid a broader national slowdown of around nine per cent. That’s the bad news. The good news is that London comes out looking like a star in this batch of data, having notched 415 housing starts ― a 94 per cent increase in the number of housing starts this April compared to last (that’s the ninth-best increase across all cities in Canada). The year-to-date pace for the London census metropolitan area, which includes Strathroy, St. Thomas and parts of Elgin and Middlesex counties, sits at 1,358 units, nearly twice the 778 housing starts for the same period last year. According to the CMHC, of those 1,358 units under construction in the London area, 1,100 are apartments.

The upshot: The data is very much a tale of two cities, or two types of cities. The national and provincial data were both dragged down by the bigs ― Toronto, Ottawa, Vancouver, etc. ― which have seen steep drop-offs in housings starts. But smaller cities in Southwestern Ontario ― London and Kitchener-Waterloo in particular ― are faring much better at getting shovels in the ground. The key question municipally is whether they will be able to keep the ball rolling in what economist predict will be a lengthy slowdown. “Starts are trending lower,” stated a TD Economics report. “And we think they will continue to decline through the remainder of this year, reflecting more recent weakness in pre-sale activity in key markets like Toronto, elevated construction costs and high interest rates.”

Read more: TD Economics | London Free Press

LHSC borrows Windsor’s top hospital boss. Are major changes in store?

The London Health Sciences Centre (LHSC) named a new interim president and CEO last week, appointing Davis Musyj ― the president and chief executive at Windsor Regional Hospital ― as the acting chief executive. According to the LHSC board, Musyj (pictured) will take an “open-ended” secondment from his duties in Windsor to take the LHSC job, where he will “assume the responsibilities of leading our executive team and the broader LHSC organization.” Musyj takes over from Jackie Schliefer Taylor, who left the job on medical leave amid an investigation over $470,000 in spending on executive travel; Musyj also assumes a $76-million deficit this year. “A stable and strong London Health Sciences Centre is good for London, Windsor, the region, the province, Canada and in fact, internationally,” Musyj said last week.

The upshot: There are a few question marks hanging over the decision to appoint Musyj. For one thing, his leave from Windsor Regional is open-ended, though on Wednesday he confirmed that he was not taking the job permanently. For another, historically his reputation is for overseeing major operational changes, not stabilizing the ship, and that’s got some wondering if he’s been brought in for a major shakeup. “I assume they needed a tough job done and he will do it,” said co-chair of the Windsor-Essex Health Coalition, Patrick Hannon, in an interview with Postmedia. “I would watch for major changes. I suspect he is going into London to clean LHSC up. He may be brought in to do what others would not do, implement major change and reorganize.” Musyj, however, countered that claim this week, saying that he is “not coming in with a pre-written agenda” on changes to make at the hospital, only that he would be consulting with a wide range of groups before making any decisions.