PRINT THIS STORY:

CHANGE TEXT SIZE:

AREA RE-SPIRITED

Entrepreneurs turning old Toronto distillery into cultural marketplace

BY SUSAN THORNE

Festival marketplaces, those distinctly urban combinations of retail with culture, history and entertainment, typically require cooperation between the public and private sectors because of their large downtown sites and high costs. But private investment alone is carrying forward an ambitious, arts-based renovation project in Toronto called The Distillery District, an adaptation of 13 acres (5.2 hectares) of handsome Victorian-era, brick-and-limestone industrial buildings near the downtown core and waterfront.

The transformation of this four-block area, a former distillery, into stylish spaces for an eclectic mix of retail and other tenants is the work of Toronto-based Cityscape Development Corp. Cityscape’s four principals recognized the historic site’s potential as a retail and cultural destination. The project will cost about C$30 million ($22 million), plus an additional C$250 million for the construction of residential units on adjacent sites.

“Our vision was to combine the romance and relaxing atmosphere of European walking and patio districts with the hip, cool dynamic of an area like [New York City’s] SoHo or Chelsea, where creative minds get together and you feel as if anything could happen,” said real estate broker Matthew Rosenblatt, one of Cityscape’s principals. (The others are architect Jamie Goad, lawyer John Berman and planner David Jackson.)

Vancouver, British Columbia’s Granville Island was one model Cityscape had in mind, Rosenblatt says, but inspiration came also from Boston’s Faneuil Hall, such European pedestrian quarters as Barcelona’s Ramblas, and Toronto’s arts-oriented Yorkville and Queen Street West neighborhoods.

Backed by an unidentified private investor and abetted by the drop in real estate prices that followed the Sept. 11 attacks on the United States, Cityscape bought the property in December 2001 for C$11 million ($7 million, at the then-exchange rate) from British beer and spirits maker Allied Domecq in December 2001. The 44 19th-century buildings, a 15-minute walk east from the downtown financial district, were intact and in reasonable condition, but had been unoccupied for 10 years since the departure of the Gooderham & Worts whiskey distillery, which was founded there in 1832.

Cityscape has spent C$25 million thus far on the refurbishment and servicing of the structures and their adjoining walkways. The tenant fit-outs are substantial too. Toronto-based Soulpepper Theatre Company, for example, will invest approximately C$12 million to C$15 million developing its four theaters, a project begun last month.

Tenants began moving into the project in late 2002, creating a mix of retail, office and studio occupants anchored by businesses involved in the arts. There are 15 fine arts and crafts galleries and 11 specialized studios producing such handicrafts as textiles, furniture and paper. DanceWorks, Sinfonia Toronto and 24 other arts organizations have located their administrative offices here, and one 72,000-square-foot area is leased to Toronto Artscape, a nonprofit agency providing affordable studio space for 34 artists there.

Visitors can check out 40 retail venues, among them nine eateries, from cafés to gourmet restaurant Perigee, with its tasting menu and open-kitchen view of the chef at work.

To date, 75 percent of the 350,000 square feet of gross leasable area is leased, and most of the remaining retail space is spoken for. Filling tenant premises has taken time, because Cityscape avoids chain operations.

“You’ll notice that there is no McDonald’s here,” said Cityscape principal Berman, the lawyer. “We wanted owner-operated establishments that were unique, so we went out and hand-picked such people.” Asked how this was accomplished, he replied wryly, “There’s nothing that a couple of thousand phone calls won’t do.”

Some recruits, such as gallery owners Sandra Ainsley and Jane Corkin, were already established at other Toronto store locations. When they came to the Distillery District, their admirers came too.

Berman predicts that this one-of-a-kind leasing approach will attract sophisticated visitors to Toronto — ironically, by appearing to gear the project to locals.

“Part of our philosophy with tourists was to create a space oriented to local residents rather than out-of-towners,” Berman said. “When we go to a city, we like to go to places that the locals enjoy, not to a tourist trap. So there are no T-shirt and poster shops at the Distillery District — everything is built and designed in a quality way, with really special stores and restaurants. We think tourists will be pleased.” The SARS scare kept tourists out of Toronto for some of 2003, but Berman expects things to improve greatly this year.

One new tenant generating a buzz is Lileo, a 7,000-square-foot lifestyle and apparel store that opened in February and whose offerings include fashionable clothing for yoga and exercise, a juice bar, organic skin-care products and books about wellness and fitness. The store’s name pays homage to Galileo, whose spirit of innovation is reflected in the concept, says owner Syd Beder. He says he was attracted to the Distillery District because of its authentic ambience and architecture.

“I wanted something to inspire me and my customer, and this location does that with the buildings, the light,” he said. “It’s totally not a mall experience, and that is very important to me.”

The Distillery retail-leisure site covers four blocks near Toronto’s waterfront.

Ainsley, proprietor of the Sandra Ainsley Gallery, is enthusiastic about the high-ceilinged, 7,000-square-foot premises from which she purveys glass and mixed media sculptures.

“It’s a beautiful old space with great scale, and the architecture is quite splendid,” she said. “It creates a beautiful contrast between the exposed brick walls and the sleekness of glass in the contemporary works we sell.” She adds that the synergy among the art retailers in the complex is good, and her store is frequented by many new visitors as well as regular customers. “We get hundreds of people every week, and sales have been good,” she said. She declined to specify just how good, but the prices of her merchandise range from $100 to four figures.

And yet, though individual retailers may be flourishing, the Distillery District faces challenges in establishing itself as a retail and leisure destination, according to John C. Williams, senior partner at the J.C. Williams Group, a Toronto retail consulting firm. One issue, Williams says, is the retail mix. Theaters, for instance, which primarily attract evening visitors, don’t help daytime retailers much.

“And it is a difficult location,” he said. “The target market is upmarket people who don’t live there, yet the District is separated from the downtown by a residential area which is seedy, [though] not rough.”

For all that, he says, the awkwardness of the location can be overcome with a stronger retail offering. “I think once it’s fully occupied, the Distillery District will have more of the critical mass that’s needed to make it a destination place,” he said. “In the meantime, each retailer going there has got to be a destination retailer with as much of an established clientele as possible.”

The center’s marketing, he says, should stress the combination of activities. “They should say, ‘Come and spend Sunday and have lunch and do a gallery,’ for instance. It has to be a place to see and be seen, and you have to wrap some panache around it.”

Cityscape’s principals say they are pleased with their project’s financial performance thus far. “We’re just turning the corner in terms of getting into the black,” Berman said. Retail rents, kept low in the project’s first months, are now set at C$15 per square foot per year, or 6.5 percent of gross sales, whichever is greater, and they increase by 4.75 percent per year or in step with the consumer price index, whichever is greater.

A significant share of revenue comes from one unusual source: the rental of the site as a period movie set. More than 900 films have been shot there over the past 14 years, including Three Men and a Baby, Chicago and the coming Against the Ropes, and this activity continues. Cityscape also plans to build 400 residential condos in the northwest corner of the project, which will provide further income. The timing of that component is not yet fixed.

“We love this place, and it’s coming together very well,” Berman said. “People in Toronto are taking pride in it and starting to make it their own. It’s a good news story, and we’re very gratified.”

© 2008 ICSC. All rights reserved. | Terms and Conditions | Privacy Policy | Contact ICSC | ICSC Home |