Few set up shop in mixed-use buildings

Urban planners laud them, condo buyers love them, but mixed-use commercial/residential developments have yet to win the hearts of Winnipeg retailers.

The Excelsior on Waterfront Drive, Place Joseph Royal on Provencher Boulevard, Pulse on River Flats & Lofts on River Avenue — there’s no shortage of high-profile commercial/residential developments that have been a hit with residential users, but a bust with retailers.

With The Excelsior, for example, Sherwood Developments Ltd. has sold 46 of its 48 residential units, but has leased out only 850 of its 11,000 square feet of commercial space. And that’s after three years of trying.

Place Joseph Royal has sold all 58 of its residential condos, but has leased out less than half its 8,000 square feet of commercial space.

And Pulse on River has sold 41 of its 44 residential condos, but the building’s commercial listing agent,Rennie Zegalski of C.B. Richard Ellis Chartier & Associates, is having a tough time finding tenants for the two main-floor commercial units.

It’s been a similar story over at the Excelsior — lots of tire-kickers but few buyers, according to Sherwood Development president Fausto Pereira.

Pereira admits he’s perplexed by the lack of interest on the part of retailers or other commercial operators.

"I thought we’d be at least 50 per cent leased by now."

Officials have a few theories about why local retailers aren’t going gaga over mixed-use developments.

Pereira and CentreVenture Development Corp. CEO Ross McGowan said one of the most common complaints they hear is that there aren’t enough people living in the Waterfront Drive/East Exchange area to support businesses like grocery stores, bakeries or coffee shops and restaurants.

Another is that $20 per square foot, the going net rate for new retail space in the city, is too pricey for most mom-and-pop-style retailers.

That means developers and city officials need to find a way to make the rents more affordable, said Jino Distasio, director of the University of Winnipeg’s Institute of Urban Studies.

Distasio said other cities have used a combination of tax breaks and rent subsidies to accomplish that, and he noted the City of Winnipeg already offers some tax breaks for downtown developers.

McGowan said CentreVenture is also willing to consider rent subsidies as a way of spurring more downtown retail development. But it’s up to developers and property owners to come up with proposals. "We’ll help, but we’re not going to lead," he said.

The rent-reduction approach worked with the lone retail tenant that Sherwood Developments has lured to The Excelsior.

Angela May, owner of Lash Love/Love Nail Bar, said she was able to negotiate a break on her rent, although she isn’t allowed to say how much of a break. That, coupled with Sherwood’s willingness to help with tenant improvements to her space, is what persuaded her to set up shop there.

Distasio said higher population densities is one of the reasons why mixed-used developments have been so successful in larger cities.

It also helps that larger cities often have subways or some other form of rapid transit, he said, because mixed-used developments often spring up around key transit stops.

Know of any newsworthy or interesting trends or developments in the local office, retail, or industrial real estate sectors? Let real estate reporter Murray McNeill know at the email address below, or at 697-7254.

murray.mcneill@freepress.mb.ca

Back to the future

Jino Distasio, director of the University of Winnipeg’s Institute of Urban Studies, said mixed-use buildings with businesses on the main floor and apartments above were once a common sight in downtown Winnipeg and along key bus/street-car routes such as Osborne Street. He said that can be the case again, and he offered a few suggestions for how city officials could help make that happen:

❚ Identify a few areas where they want to see more residential development and focus their efforts and resources on encouraging mixed-use development in those areas.

❚ Take it one step farther than in the past by encouraging a broader mix of uses within the same building — a combination of retail and office space on the lower levels, and condominiums and affordable rental units on the upper levels.

❚ Pass zoning bylaws requiring any new mixed-use developments to include affordable rental units as a way of bringing residents to the area. A good starting point might be 10 per cent of all the units in the building.

❚ If Winnipeg proceeds with the development of a rapid-transit corridor between the downtown and the University of Manitoba, use that as a springboard for encouraging mixed-used developments at key stops along the corridor. That approach has worked in other cities, it worked here during the early years of the city’s development, and it can work again.