Heritage status adds to downtown Bay’s challenges
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Hey there, time traveller!
This article was published 26/11/2019 (1110 days ago), so information in it may no longer be current.
After reading a recent Free Press headline reporting “Downtown Bay appraised at $0,” it’s likely some people thought: “At that price, I’ll take it.”
Not so fast, real estate tycoons. There would be more to the deal than the appraised price.
How low can it go? Downtown Bay appraised at $0
Guess which of the 79 buildings the Hudson's Bay Co. owns in its multibillion-dollar real estate portfolio is practically worthless?
Of course you know the answer. It's The Bay's iconic flagship store in downtown Winnipeg.
Cushman & Wakefield conducted an extensive technical appraisal of the company's properties as part of a lengthy corporate transaction that's in the works to take the company private. It concluded what many in Winnipeg already understand to be the case — the Portage Avenue building is not worth anything... $0.00 to be exact, according to Cushman & Wakefield.
For starters, Hudson’s Bay Co. has given no indication it wants to sell, or give away, its flagship building at Portage Avenue and Memorial Boulevard. The attention-grabbing appraisal last week came from a firm of commercial real-estate brokers tasked with evaluating all 79 of the Hudson’s Bay’s buildings amid a corporate transaction underway to take the company private.
And even if it were possible to obtain the building, its ownership would come with significant hurdles.
There’s a $302,298 tax liability to be settled up, but the longer-term challenge is shopping patterns have changed since the days when consumers crowded large-format downtown department stores such as the Bay. The advent of suburban malls and the recent competition provided by online shopping have drained business at the Bay, leaving four of the six floors empty except for memories.
There have been suggestions to use the building in different ways. Some people have blue-skied that the building could find new life as a venue for entertainment, or as condos, or as a shelter for homeless people, or as Canada’s largest indoor marijuana grow-op. The University of Winnipeg declined it as a gift in 2012.
A big problem with repurposing the downtown Bay can be summed up in two words: historical designation.
This classification was inflicted on the building despite an official letter from Hudson’s Bay Co. trying to prevent the designation because it restricts what the company can and must do with its building.
City officials say the building’s architectural and historical significance requires protection. Four exterior and four interior aspects of the building were identified as “character defining,” and these aspects can’t be altered unless the city gives permission. Also, the building can’t be demolished.
Not unexpectedly, there’s tension between the desire to preserve heritage property and the right of a building’s owner to do what it wants with its asset. It’s a tension Winnipeg has experienced before, most recently with a century-old mansion at 514 Wellington Cres. that was going to be demolished to make way for three houses, before neighbourhood activists blocked demolition by nominating the Crescentwood neighbourhood as a heritage conservation district.
It’s understandable the Bay is valued for its heritage appeal. The 93-year-old building, clad in limestone, was an outstanding engineering achievement when it was built with 150 reinforced concrete columns and concrete floor slabs that are 50 centimetres thick.
Not unexpectedly, there’s tension between the desire to preserve heritage property and the right of a building’s owner to do what it wants with its asset.
But it’s also understandable that any potential owner of the building would want to know how much it would cost to upgrade it to modern standards for electricity, plumbing, fire safety, heating and air conditioning. That’s why the building’s value is appraised at $0. The current speculation is the cost to upgrade the building would exceed any realistic selling price.
If Hudson’s Bay Co. wants to part with the building — either selling it for profit or giving it away for a tax break — the first step should be a feasibility study estimating the cost of upgrading the building to modern standards.
The value of the building’s past to Winnipeg is shown by its heritage designation. The challenge now is to explore options most likely to offer the building a viable future.