Winnipeg Free Press - PRINT EDITION

The HQ Effect

Police move to former Canada Post building triggers run on real estate

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The red box on this map shows the new Police HQ. Black boxes outline properties that have changed hands since 2008. Use the plus and minus buttons at bottom right to zoom in our out of the map, then click on any outlined property for more details including the property's owner, sold date, value in 2008 and 2013, and a Google Street View image of the property. View this map in a new window.

The immediate area surrounding Winnipeg's new downtown police headquarters is the focus of a significant real-estate play, with nearly half the properties changing hands within the past five years.

Since early 2008, when the Winnipeg Police Service first disclosed it was eyeing a purchase of the former Canada Post building on Graham Avenue, 27 out of 64 properties within a one-block radius of the structure have been sold.

New kids surround the block

27 properties have changed hands since 2008 in the one-block radius surrounding Winnipeg's new police headquarters. That means 42 per cent of all the parcels in the eight-block district have changed hands since the police began kicking the tires at the former Canada Post building.

The total volume of land sold in this area since 2008 is 3.8 hectares, equal to the footprint of three MTS Centres.

Between 2008 and 2013, commercial assessments rose 64 per cent citywide. In the eight square blocks around the new police HQ, the average commercial assessment increase was 84 per cent.

The land that changed hands since 2008 includes huge parcels on Graham Avenue, including the future site of the Fortress/Mady condo tower and a surface parking lot to the east.

The land also includes four properties bought by Longboat Development Corporation, a development arm of the Chipman family businesses. When the Winnipeg Jets returned, the Chipmans renovated and moved into a suite of offices on St. Mary Avenue.

The property sales also include nearly the entire block bounded by Portage Avenue, Garry Street, Graham Avenue and Fort Street. Buildings on this block that have changed hands include Yoga Public, the Garrick Hotel and the Peace Hills Tower. Several have seen significant renovations -- and there is a conditional offer of sale on the former Fame nightclub.

During the same period, the assessed value of all commercial properties in the eight blocks around the new police headquarters increased by an average of 84 per cent, exceeding the city-wide average of 64 per cent for commercial-property assessments from 2008 to 2013.

According to property owners, real-estate professionals and other downtown stakeholders interviewed by the Free Press, the creation of a workplace for more than 1,150 police employees in South Portage has improved the perception of safety in the downtown neighbourhood.

But the new police HQ is only one factor enhancing interest in the area. This eight-square-block section of South Portage also appears to have benefited from the elimination of the liquor licence at the problematic St. Regis Hotel, private and public investment in the sports and entertainment district to the west and a modest resurgence in downtown Winnipeg as a whole.

"I think everyone has a different motive for wanting to do things in that area," said Ken Yee, senior vice-president at Cushman & Wakefield, the real-estate arm of the Chipman family-owned Stevenson Group, which occupies space in buildings recently purchased in this area by its development arm, Longboat Development Corporation.

"Any time you have 800 people, 24-7 at any particular site, they have to go out and have coffee and grab lunch. Is it enough to get people to start speculating on a city block? Probably not.

"But when you have the police element around you, it will cast a shadow a couple of blocks either way. People walking the streets will feel a lot safer (when) you have a mega-police station there."

$210 million price tag

The Winnipeg Police Service began looking at the former Canada Post mail-processing facility in December 2007, when the city shelved a plan to fix the crumbling facade of the Public Safety Building on Princess Street.

The police disclosed the city's interest in the Canada Post building in February 2008 and then spent 18 months studying the pros and cons of the purchase. In a report to council in November 2009, the police concluded it would be advantageous to convert the Canada Post building into a "mega-PSB" that would consolidate police offices within a single facility.

The report also declared this move would "provide high police visibility in the downtown area" and "is consistent with the long-term goal of revitalizing downtown Winnipeg."

In essence, the larger police headquarters would house more police employees, whose mere presence could be seen as reassuring in an underpopulated commercial area.

"There's always been a concern about crime and the amount of crime downtown, particularly in what could be considered the heart of the city, the economic engine of the city," said Mike Sutherland, president of the Winnipeg Police Association, the union representing most police employees.

The police headquarters is slated to open in June, following a contentious $172-million construction process that has brought the overall project cost to $210 million.

Every surrounding block changed

Every city block surrounding it has already changed. On the block to the west, the park south of the Millennium Library has received a long-overdue makeover. On the block southwest of the police HQ, the Residences on York changed hands and underwent a head-to-toe makeover that resulted in its assessment soaring to $26 million from $10.5 million.

Due north of the police HQ, Winnipeg property owners Sabino Tummillo and John Garcea acquired one of downtown's largest surface parking lots and sold it to Toronto's Fortress Real Developments and Mady, a Windsor-based developer, for a reported $9 million. The Ontario firms plan to build the largest tower in Canada between Calgary and Toronto on the land.

New police headquarters on Graham Ave.

Enlarge Image

New police headquarters on Graham Ave. (PHIL HOSSACK / WINNIPEG FREE PRESS) Photo Store

Another one of downtown's largest surface lots, to the northeast of the police HQ, was purchased by a consortium of some of the city's biggest developers -- Ladco, Shelter Canadian Properties and the Berney and Margolis families, as well as a company affiliated with Investors Group.

Most did not return calls for comment, but staff at Ladco, one of the city's most successful suburban developers, said the original intent was to develop the land into mixed-use commercial space.

The rest of this block -- bounded by Portage Avenue, Fort Street, Graham Avenue and Garry Street -- has been the subject of the most concentrated set of real-estate transactions. Of the 16 properties in the block, 10 have changed hands during the last five years and the average assessed value of those 10 properties has more than doubled.

Yoga Public renovated old office space on the block, as did two stylish professional firms.

Metric Marketing, an online and social media firm, bought and renovated the ornate Inglis building at 291 Garry St., just two doors north of the Garrick Hotel.

Metric president and CEO John McDonald said the combination of improvements to two low-budget hotels in the neighbourhood and the new police HQ made it more attractive for a move from a too-small location in the Exchange District. It was difficult to find the perfect commercial space downtown and, initially, safety was a concern.

But the Garrick has improved significantly since Metric bought its building last year, and the influx of police will be an added bonus, McDonald said.

"I think that what was happening is everyone was shying away a little from south of Portage," he said. "Once one made the jump, then things just happened."

Next door, a new architecture and urban design practice just opened this month. Emeka Nadi, the principal at Nadi Design and Development, said it was hard to find suitable and affordable commercial space where the firm wanted to be -- downtown, where the renaissance is underway.

The other factor influencing this block is CentreVenture Development Corporation's acquisition of the nearby St. Regis Hotel, which had been blamed for some of the public intoxication cited as a downtown safety concern by hoteliers, office workers and most infamously, Air Canada in a leaked corporate memo.

The St. Regis is now for sale.

CentreVenture president and CEO Ross McGowan said the closure of the hotel likely influenced the activity one block to the east.

"Everyone knew we were talking about acquiring the St. Regis. That was the worst-kept secret in town," McGowan said. "The hope was we would continue."

'A lot of dots to connect'

Over the entire eight blocks surrounding the police HQ, no overall pattern of ownership emerges from the recent land transactions. "I'm not sure there are a lot of dots to connect," said McGowan, citing general optimism and the police HQ as obvious factors influencing the activity.

"There's no doubt that's going to improve the perception of safety."

What may be more revealing is the pattern of ownership that emerges from the next round of real-estate transactions, said longtime industry professional Martin Eva.

"Usually, when you see activity like this, it means people think they know something. The only projects that have been whispered about relate to subsidies or some form of government assistance," he said.

In 2010, Mayor Sam Katz promised incentives to help develop surface parking lots. Financial incentives could have significant implications for the Fortress/Mady project and the Ladco/Shelter/Margolis lot on Graham Avenue.

Council property director Jeff Browaty (North Kildonan) now wonders whether incentives are still required downtown. "Market conditions are finally taking hold," he said.

maryagnes.welch@freepress.mb.ca, bartley.kives@freepress.mb.ca

Republished from the Winnipeg Free Press print edition December 14, 2013 A6

History

Updated on Saturday, December 14, 2013 at 12:07 PM CST: Adds static image.

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