Dream Office REIT has put a modernized class A downtown Toronto tower up for sale amid the Bank of Canada’s softer stance on interest-rate hikes.

The REIT is effectively wagering that it can sell the 32-year-old property as Canada’s office market grapples with high office vacancy and investors anticipate better times ahead with interest-rate cuts expected at some point this year. The BoC held its overnight rate at 5% in December and has signalled that cuts are coming this year after officials had stated that more increases could occur to help curb inflation.

CBRE and TD Securities’ commercial real estate investment banking group are marketing the 322,835-square-foot property at 438 University Avenue near the financial core. In a marketing booklet, TD and CBRE team expressed confidence that the property can withstand tenants’ preference for newer office space.

“As the flight to quality persists, 438 University is well-positioned for continued performance highlighted by its average occupancy of 99% since 2019,” said the brokerage team in the marketing booklet.

Built in 1992, the 20-storey building is currently 93% leased and has been fully modernized, according to the booklet.

The sales effort comes after Dream CEO Michael Cooper told the Globe and Mail in October 2023 that nearly one-third of Toronto’s downtown buildings have become obsolete.

“Probably 30% of the space in downtown Toronto requires a tonne of money, a lot of investment, and it’s questionable if you put the investment in that the building will be worth enough to justify it,” Cooper told the Globe.

The brokerage team includes Peter Senst, head of CBRE Canadian capital markets group, and Ashley Marris, TD’s property brokerage leader.

Photo: Dream Leasing/Dream Office REIT