London’s landlord: How one developer landed at the centre of a fight over the Southwestern Ontario city’s core

In the core of London, Ont., one five-letter name can be seen along the rooflines of empty historic buildings, printed onto “for lease” signs hung from vacant office towers and painted onto a mural covering darkened windows: FARHI.

While not the only developer with significant land holdings in the city, the Farhi Holdings Corp. (FHC) brand, named after its owner, Shmuel Farhi, is certainly the most visible.

Like many cities across North America, London is struggling with a ghost town in its core. The city, beleaguered by decades of industrial decline in the region, was further emptied out by COVID-19 work-from-home policies and the ensuing tough conditions for small businesses. It has the highest office vacancy rate of any city core in Canada studied by CBRE, at 31.4 per cent, according to data published in October.

London is not alone in these issues. But there is a factor that sets it apart. A report by city staff, tabled in council last year, indicated that 59 per cent of all vacant commercial space in the Core Area was held by a single owner. While the report does not name any companies, property records suggest it could be only one: FHC.

The company’s holdings are not limited to London. Mr. Farhi is named as a director for corporate entities that hold properties across Southwestern Ontario, amassed over decades for a total of hundreds of millions of dollars. They encompass commercial properties, parking lots and tracts of farmland from Windsor to London, as well as The Keg Mansion in Toronto.

Within London, FHC has drawn local attention for its significant holdings, some of which have been empty and posted with “for lease” signs for years. For example, in 2005 the company bought a prominent Art Deco building that once housed London’s downtown public library. That building has remained unused ever since.

For his part, Mr. Farhi has long said any lack of development on his London sites is because of factors outside his control, such as a lack of parking, growth in the selection of suburban properties to rent and local socioeconomic conditions, including homelessness and drug use. And his supporters say he is unfairly being made a scapegoat for the municipality’s lack of action to revitalize downtown. Mr. Farhi declined to answer questions and turned down multiple requests for interviews, citing concerns for his personal safety and that of his family after receiving hateful messages.

But other landowners are developing. Towers are going up around the city, and earlier this year, FHC sold one prominent downtown office it had owned for years. The new owner immediately announced plans to redevelop it into housing, with newly announced funding for residential conversion from the city.

Across Canada, there is a heightened sense of urgency around housing and development at all levels of government. The housing shortage has become one of the most significant policy challenges of a generation – so much so that the Canadian Mortgage and Housing Corp. has declared it a crisis, estimating last September the country would need to build 3.5 million additional units by 2030 to restore affordability. Ontario itself is well behind on its own commitments.

Amid a challenging macroeconomic climate, municipalities are grappling with questions of how to encourage the development of underused and undeveloped land, with Ottawa dedicating billions to stimulate supply.

London’s predicament reveals how long-standing tensions between city dwellers and developers are being cast into relief, as local politicians navigate the lasting fallout from the pandemic and a challenging economic climate.

The situation has vexed local leaders, including in Windsor, where FHC also owns properties. “Why does he have so many holdings?” said Rino Bortolin, a former Windsor city councillor. “Why is he just sitting on them? Why is there no action?”

As Mr. Farhi has told it over the years, he got into the Canadian real estate industry by chance.

He was born in Israel in the early 1960s and studied business at Technion, the Israel Institute of Technology. He initially started working with his father in the insurance business, according to a corporate biography. He and his father then opened an import-export business and he began working in the United States, he told The Canadian Jewish News in 1991.

At an investor event in Jerusalem in 1989, Mr. Farhi told an audience that, at age 23, he was selling security fences in the U.S. and Central America, the Israeli Hebrew-language newspaper Maariv reported at the time.

During one of his trips to the U.S., Mr. Farhi had a fateful meeting. He was on a flight to San Francisco when he sat beside a London, Ont., land developer named Mary Bray. Mr. Farhi soon moved to Canada and the two formed a short-lived partnership.

In 1988, Mr. Farhi founded FHC – his main corporation – and entered the property market in London, a city he described to The Canadian Jewish News as booming.

But it was a decade later, when London’s boom times had ended and there was a glut of office space available cheaply, that Mr. Farhi started aggressively acquiring property downtown.

“One of the ways that the Farhi Corporation got so much of this real estate to begin with is that they saw an opportunity in the 1990s after the economy crashed,” said Mike Moffatt, a senior director at the Smart Prosperity Institute, a national economics think tank, and an assistant professor at Western University’s Ivey Business School. “There was a big flood of office space.”

Properties owned by companies

that list Farhi as a director

As of Oct. 2024

Stormont,

Dundas and

Glengarry: 1

531 Dufferin Ave.

17 condo units

200 St. James St.

17 condo units

620 Richmond St.

64-unit mixed

residential and

commercial

complex

Other properties with unknown addresses

MURAT YÜKSELIR AND STEPHANIE CHAMBERS /

THE GLOBE AND MAIL

Properties owned by companies

that list Farhi as a director

As of Oct. 2024

Stormont,

Dundas and

Glengarry: 1

531 Dufferin Ave.

17 condo units

200 St. James St.

17 condo units

620 Richmond St.

64-unit mixed

residential and

commercial

complex

Other properties with unknown addresses

MURAT YÜKSELIR AND STEPHANIE CHAMBERS /

THE GLOBE AND MAIL

Properties owned by companies that list Farhi as a director

As of Oct. 2024

Stormont,

Dundas and

Glengarry: 1

531 Dufferin Ave.

17 condo units

200 St. James St.

17 condo units

Other properties with unknown addresses

620 Richmond St.

64-unit mixed

residential and

commercial

complex

MURAT YÜKSELIR AND STEPHANIE CHAMBERS / THE GLOBE AND MAIL

According to the FHC website as of October, the company now owns and manages “more than fifty million square feet of office, retail, residential, and hospitality space in communities across Ontario, as well as 10,000+ acres of land holdings and development projects throughout southwestern Ontario.”

While Mr. Farhi does not publicly disclose the full value of his companies’ holdings, which span Southwestern Ontario, a Globe search of Ontario real estate records as of December, 2023, found more than 200 properties, owned by companies that list Mr. Farhi as a director (sometimes among several), purchased for more than $370-million over the past 30 years – a number that wouldn’t account for price appreciation. A small tech company he invested in said in a 2012 news release that FHC’s holdings were worth more than $500-million at the time.

And Mr. Farhi has ventured into other industries. In 2011, he invested in a minor league hockey team, the San Francisco Bulls, which he saw as a step toward future ownership in a major league, according to an article in The London Free Press. “In five to 10 years, I will look into an NHL team,” he told the newspaper. (The Bulls folded three years later.)

Mr. Farhi has also invested in small biotech firms and even a standardbred horse farm. In April, he was announced as a member of the advisory board of Top Tier Authentics, a digital platform for authenticating sports memorabilia.

He has completed a few notable real estate projects. One was redeveloping the Idlewyld Inn & Spa. The historic London mansion, built in 1878, became a boutique hotel in 1986. It was put on the market in 2013, bought by FHC and reopened six months later after careful renovations.

In recent months, the company appears to have been trying to offload some of its properties. It listed the former site of the recently demolished London Free Press building, as well as a vacant lot and two small commercial buildings, for sale for $1 with an “unpriced” label. Some of those listings have already been removed.

And outside the city, the company is building. FHC is currently constructing subdivisions in Windsor and two small Southwestern Ontario communities, St. Thomas and Port Glasgow, and lists four future projects on its website that it says will create a total of 1,800 new housing units.

The company also says on its website it has donated more than $35-million to various charitable causes over the past 35 years.

But overall vacancy in London’s core has been growing, and the city has been paying attention.

In 2019, the city eliminated a 30 per cent tax rebate for vacant properties, with councillors saying it had effectively been a $2-million-a-year subsidy for landlords to do nothing with their land.

And in 2023, London city staff put together a report studying the numbers and proposed strategies to improve it. The report pointed out that, of the more than one million square feet of empty commercial space in the city at the time, 59 per cent was held by one owner.

The report, based on data collected in the fall of 2022, when vacancy was about 24 per cent, said that owner held only Class B or C property, meaning the spaces were older and required more renovation. (City staff use different boundaries from the CBRE to define the city’s “core.”)

“Having this amount of vacant land concentrated in the hands of one owner has not been good for the city,” said former deputy mayor Maureen Cassidy.

The Farhi portfolio includes some buildings that were, at one point, London landmarks.

In 2005, FHC bought the former central library on Queen St. for $1-million – a price that was discounted by $1.4-million, because the building needed asbestos removed. The city rezoned the site for development in the same year. But 19 years later, the 90,000-square-foot building with 80 parking spots on its property remains undeveloped and vacant.

The sales contract for the library, which The Globe obtained under freedom of information law after reporting by CBC London, originally contained a clause that would have allowed the city to buy back the old library if no significant renovations had been undertaken after two years. But that clause was scratched out in pen. City staff told The Globe they could not explain why it had been removed but, in general, they would not recommend removing such a clause.

Nearby is another prominent FHC holding, the Wright Lithography Building, a 1902 heritage site. The building is also vacant. Mr. Farhi told the city in 2012 that a lack of parking and expensive upkeep were barriers to finding a tenant.

In 2020, the city said that in not heating the building, FHC had failed to comply with property standards, and ordered it to restore heating equipment. The company filed an appeal of that order, saying that the building had been a subject of frequent break-ins and theft, which left Mr. Farhi paying out of pocket to replace electrical and mechanical equipment.

FHC also bought the former London Free Press building with the goal of developing it as a small business and innovation hub, including a $20-million retrofit announced in 2018.

But after saying it had been unable to find tenants due to the economic climate, the company changed plans and started demolition of the building last year. In June, the site – along with an adjacent empty lot – was relisted for sale.

Like many downtowns, London’s high commercial vacancies in its core reflect a similar excess of office space across North America, Dr. Moffatt said. This glut of office space can be attributed to a variety of factors and were accelerated by the rise of work from home as the pandemic took hold. And that office vacancy has a knock-on effect on retail success, as well, he said.

According to Mr. Farhi, the absence of tenants is not for lack of trying.

He has often said he could not attract major employers to the area because there is not enough parking in the core.

“Today, office space without parking is almost impossible to lease, as our vacancy rates illustrate,” Mr. Farhi wrote in an e-mailed presentation sent to London City Hall in 2013. With the exception of the library site, which has 80 parking spots, he said, many of the company’s downtown sites lacked space for cars.

Over the years, FHC has continued to file requests with the city to demolish buildings and replace them with temporary surface parking lots to service remaining buildings.

But the city wants to see the company – and other lot owners – develop those properties. In its 2016 city plan, London said it would not allow any new commercial lots. The downtown core has 67 surface parking lots, according to the city’s vacancy report. According to 2023 property records, at least a dozen listed Mr. Farhi on the title.

“When I hear Londoners say there’s no parking in downtown London, I want to laugh because there’s so much parking in downtown London and it is so cheap compared to Toronto,” said Ms. Cassidy. She added that the city’s goal in banning future lots was to encourage developers to build to the highest and best use, to add housing units downtown and to collect more property tax.

One property on Central Ave. remained a “temporary lot” for more than 30 years, with city council approving permits eight times, according to a planning report. In January, FHC proposed a condo tower on the site.

In 2020, when FHC asked to demolish a building at 120 York St. to build a temporary lot, the company said it had “every intention” of redeveloping the site subject to “market absorption.” But half the city councillors resisted, with some expressing skepticism to local media about future development, given that no plans to do so had yet been presented.

Beyond parking, Mr. Farhi frequently refers to other factors keeping tenants away.

One is that many of his properties in London’s core are historic buildings, which can be expensive and difficult to retrofit for modern use. FHC has frequently cited the millions of dollars it has spent on building preservation.

He says he has also faced competition from offices in the suburbs, where space is cheaper and the amount of available parking is greater. He has called for a moratorium on office developments in the suburbs to incentivize businesses to bring their employees downtown. For example, he and his lawyers wrote letters to city council in recent years as it debated whether to allow Westmount Shopping Centre, in the suburbs, to convert more space to offices.

According to CBRE’s October report, the suburban office vacancy rate was much lower than in the core, although the suburbs contained only about a quarter of the city’s office inventory.

Another recent deterrent is safety concerns. Since the pandemic took hold, the number of people experiencing homelessness in the city has doubled, and drug use in the core has become much more visible.

Along the city’s main downtown thoroughfares, it’s common to see people sleeping in doorways. Crime, break-ins and vandalism have climbed. As a result, building insurance premiums have gone up and many small businesses are having trouble staying open, London Councillor Susan Stevenson said.

She thinks that Mr. Farhi has become a scapegoat for the city’s inadequate approach to managing these issues. “It seems as though we’ve made him the excuse for why things are the way they are,” she said.

Former London city councillor John Fyfe-Millar also said the developer receives undue blame. He said that while “people perceive that property sits vacant because people are speculating on them,” what’s really happening is that FHC is gathering enough properties to have large enough parcels to develop.

“He’s not the issue with our downtown,” Mr. Fyfe-Millar said. “And I think giving him that power is a problem. I think putting him on that pedestal to say that he has that much influence … you just don’t. I know the other developers and they have the same problems, at the end of the day.”

He added: “The reality is, in my opinion, Shmuel’s personality gets in his way sometimes.”

One outburst made the local news. At a meeting of the Downtown London Business Improvement Association on Nov. 7, 2023, Mr. Farhi took the microphone to express frustrations about what he saw as a lack of action on the association’s behalf to address the social issues downtown.

“‘Let’s do things and let’s do flowers’ … This is bullshit. This is nothing,” Mr. Farhi told the audience of local leaders, according to video published by CTV News.

In a public announcement the year before, he appeared to cast some aspersions at London’s municipal leadership.

In November, 2022, he stood with Windsor Mayor Drew Dilkens to open a refurbished hotel in that city’s downtown, which he said cost $25-million, and extolled his company’s relationship with Windsor while seemingly calling out his home base of London. (He has also received almost $10.5-million in tax rebates for brownfield land cleanup on a site outside Windsor’s core, where he is nearing completion of a subdivision and apartment building.)

“I will tell you the truth and nothing but the truth,” he told the small crowd at the announcement, according to video published by the Windsor Star. “Out of 47 municipalities that my company involved, Windsor by far the best. … I can’t say it to our neighbour down the road, but this is amazing city to work with.”

The problems Mr. Farhi has cited – such as parking and safety – are being faced by other developers, said Mike Wallace, executive director of the London Development Institute. The association represents about 15 developers in London, but not FHC, as they mainly represent owners with newer properties, he said. While his members are not developing new office space downtown, he says, they see a future in residential development.

A few condo towers have sprung up in downtown London in recent years – they just haven’t been built by Mr. Farhi.

Last year, council approved two apartment towers of 45 and 53 storeys by York Developments, which will be the city’s tallest buildings once constructed.

Other projects downtown include Old Oak Group’s Centro building, which began leasing hundreds of apartments this year.

“It’s not really rocket science,” Mr. Wallace said. “We’re in the business to meet demand in the marketplace, and we’re seeing residential construction downtown. You know that they’ve done their homework and there is a market and demand for living in the downtown core of London.”

One case in point may be a five-storey office building at the northeast corner of Richmond and Dundas streets that has been empty since 2018, when the Rexall pharmacy on its bottom floor moved out. Property records show Mr. Farhi had bought the office building, and an adjacent property, for $600,000 in 2010. In January, he sold the building for $5-million to Mississauga-based developer Maas Group.

In May, the city of London said it was providing $415,000 in funding to Maas as part of a new program to incentivize office-to-residential conversions. “We are honoured to participate in the revitalization of this heritage building and bring new life to this underutilized property,” Maas president Samir Jan said in a news release.

At the southwest corner of the same intersection is a Farhi-owned building called Market Tower. It long housed city staff working for social services, parks and recreation and other departments. But the city moved out in 2016 and the tower has seen few tenants since then.

In June, as council discussed redeveloping its aging city hall, FHC – with guidance from former London city planner John Fleming – pitched council on redeveloping Market Tower and two adjacent buildings into a new complex for municipal staff. In a proposal sent to council, the company offered to sell all three properties to the city for a “fair market” price set by a city-approved appraiser.

The company said the purchase could be financed through a mix of credits to development charges if FHC built housing elsewhere in the city, cash and a two-year, zero-interest loan. Downtown councillor David Ferreira told The London Free Press the proposal had arrived too late in the planning process to be considered.

The city staff report last year on vacancies contemplated other actions London could take. It included a range of options, including buying up vacant land or parking lots the city could develop itself or convert into parkettes that might make neighbourhoods more attractive to visitors.

Yet municipalities have few tools to force landowners to build.

“Once a rezoning application is approved and the concept of a building is approved, then the city council’s role is pretty much done,” Ms. Cassidy said. “They can’t make a developer develop.”

With a report from Stephanie Chambers