If GM shutters Oshawa plant, land ripe for redevelopment

Company has already had offers of interest from potential buyers and governments

For more than a century, hundreds of acres of land in Oshawa have been a vital part of Canada’s automotive industry.

But where assembly lines and paint shops stand today, a decade or so from now there could be condos, office towers and shopping malls.

In November, General Motors stunned the city, announcing it would stop pro- duction at the end of this year. This week, the last Chevy Cruze rolled off the line at a GM plant in Lordstown, Ohio, the first of five plants across North America scheduled to be shut down in the wake of the November announcement.

While a public relations and political battle is waged over the fate of the Oshawa plant’s 2,600 workers, real estate experts say the facility’s prime location — near highways and public transit — and the Greater Toronto Area’s hot real estate market, make it an irresistible target for developers.

“You’re looking at some mixture of condos and retail, probably,” said John Andrew, a professor at the Smith School of Business at Queen’s University.

“Nobody’s coming in and building a large factory. That’s really not happening these days.”

Before the ultimate fate of the GM land in Oshawa — adding up to 15 million square feet or 344 acres — is decided, there could be some short-term use, said Avi Behar, president and CEO of The Behar Group, a Toronto real estate brokerage.

GM could rent parts of the plant or land out for other industrial users.

They could sell it to another company to take on cleaning up the land, having it rezoned, then flipping it at a profit to a developer.

“I think that ultimately this will be mixed use of some kind, including condos, office space and some retail,” said Behar, whose brokerage is selling another sizable parcel of Ottawa industrial land, albeit not owned by GM.

So far, the company hasn’t tipped its hand on the future of the site beyond the end of the year, but spokesman David Paterson said GM has already drawn interest from potential buyers — and governments.

“We do periodically receive inquiries from governments and others concerning the various properties identified in our November announcement, and we welcome all inputs. But it is still too early to speculate or comment on this at this time,” said Paterson, GM Canada’s vice-president of corporate and environmental affairs.

As far as the value of the GM land goes, it’s really a bit of a mug’s game trying to predict how much it would fetch on the open market, Behar said.

“It really depends upon what kind of use the municipality envisions or would approve. It could really range from $30,000 an acre, to $3 million an acre,” Behar said.

Dealing with rezoning, city planning and site cleanup could take years, he added. “This is not a quick turnaround kind of project.” Oshawa Mayor Dan Carter said the city’s strongest preference is for GM to keep its assembly lines going. But if that doesn’t happen, he made it clear that condos aren’t a favoured option. Something commercial, with jobs, would be the priority. “We would not entertain changing the site from prime commercial/ employment lands,” Carter said in an emailed statement, adding that GM currently pays Oshawa roughly $3.3 million a year in property tax.

Nor, said Carter, would the city consider chipping in funds to assist with site cleanup. No cost-benefit analysis of alternative uses for the site — such as whether residential properties would produce more tax revenue than industrial or retail uses — has been done either.

That’s surely not a surprise, said Ryerson urban studies professor Christopher De Sousa. Nobody — least of all a politician who needs to be running for office again in a few years — wants to be seen as giving up on the jobs.

“Because it’s been such an important part of Oshawa’s history, and it’s such an iconic site, the process might take more time. They have to be sensitive to that,” De Sousa said.

Still, he expects the push for redevelopment will ultimately be successful. That’s the way things have been going across Ontario.

“Municipalities have been pushing two big things: becoming more green, and greater density,” De Sousa said. The numbers are equally clear, De Sousa added. Of more than 4,500 proposed “brownfields” projects — former commercial, industrial or agricultural sites requiring a cleanup — in the province between 2004 and 2015, more than twothirds are to become residential sites. In Toronto alone, more than 80,000 residential units were created on “remediated” (cleaned-up) land between 2004 and 2011.

Not that the cleanup is a cheap or fast process, De Sousa warned. Whatever it costs would be deducted from any potential purchase price. Knowing exactly what the clean-up costs is impossible until a site assessment and testing of soil is done.

“I’ve even had to tell municipalities who’ve asked, you can get a Phase 1 (site assessment) or a Phase 2 (soil testing) estimate, but nobody’s going to give you a clean-up estimate,” said De Sousa, who’s also vice-president of the Canadian Brownfields Network, an association of stakeholders including companies, academics and governmental representatives.

Still, in the end, the cleanup — and redevelopment — will happen, De Sousa believes, if only because there’s money to be made.

“It won’t be an upside-down site, where the cost of the remediation is more than the land is worth. There’s still a value in the land,” De Sousa said. “We’re blessed with a very strong real estate market in the GTHA. So that means that somebody will end up doing this.”