May 29, 2020

Winnipeg
6° C, A few clouds

Full Forecast

Winnipeg Free Press

ABOVE THE FOLD

Help us deliver reliable news during this pandemic.

We are working tirelessly to bring you trusted information about COVID-19. Support our efforts by subscribing today.

No Thanks Subscribe

Already a subscriber?

Appraisal of Bay at $0 stirs interest

Opinion

Hey there, time traveller!
This article was published 27/11/2019 (183 days ago), so information in it may no longer be current.

It would be wrong to suggest that Angela Mathieson's phone has been ringing off the hook. But there certainly have been more people in recent days calling the CentreVenture CEO to inquire about the future of The Bay building in downtown Winnipeg.

The interest in The Bay's flagship Winnipeg store was piqued by an appraisal report on 79 buildings owned by the Hudson's Bay Co. (HBC), which is currently readying itself to go from a publicly traded entity to a private one. The market value of these physical assets will play a role in determining the share price offered to current investors.

The appraisal pegged the value of the historic downtown Bay building at -- wait for it -- zero.

The zero valuation comes from an appraisal formula that compares the value of the land and structure, the potential revenue that can be generated from it and its costs and liabilities. A quick scan of the predicament facing the Bay building explains the net zero valuation.

The building, which has more square footage than any other commercial property downtown, is not currently suited for any purpose other than its original -- a department store. However, we live in a day and age where e-commerce, and not bricks and mortar stores, dominate retail. Stores like this are too big, too old and utterly incompatible with current customer trends.

The building, which has more square footage than any other commercial property downtown, is not currently suited for any purpose other than its original — a department store. (Mike Deal / Free Press files)

The building, which has more square footage than any other commercial property downtown, is not currently suited for any purpose other than its original — a department store. (Mike Deal / Free Press files)

Shopping for a new day at downtown Bay

Click to Expand
The Bay has more square footage than many other large buildings in Winnipeg. (Aaron Pollock)
The Bay has more square footage than many other large buildings in Winnipeg. (Aaron Pollock)

Posted: 17/06/2017 3:00 AM

It’s very big. The imposing but nearly vacant Hudson’s Bay building on the southeast corner of Portage Avenue and Memorial Boulevard, one of Winnipeg’s most important intersections, is many things. Big is certainly one of them.

At just over 650,000 square feet, it is a behemoth whose size is concealed by its modest six-storey construct.

Read Full Story

Given the limitations on its use, and the enormous costs of converting it for some other purpose, it has no value. There are some in the commercial real estate industry who will tell you it actually has a negative value: the costs of retrofitting the building are more than its current value.

But then came the appraisal report and some renewed interest in what sort of deal could be reached to acquire and convert the grand and stately building. Mathieson, who heads up the city agency that markets downtown real estate, could not be happier about the timing.

"The release of the appraisal is quite helpful," said Mathieson.

"It puts the building and its value into current and proper context. It allows more people to imagine what it would look like when it's redeveloped."

Calls have come since the release of the appraisal, she said, although most are of the completely exploratory variety. Still, Mathieson said it is always good to jump-start interest in a project that has been surrounded with uncertainty for years.

Over the past 20 years, HBC has reduced the number of floors it used for retail activity and closed both a basement-level grocery and a sixth-floor restaurant, the iconic Paddlewheel.

In 2012, HBC offered to turn over the building to the University of Winnipeg for nothing. Ultimately, the U of W had to refuse the gift, unable to find either the money for renovations or basic overhead.

Angela Mathieson could not be happier about the timing of the appraisal report and some renewed interest in what sort of deal could be reached to acquire and convert the grand and stately building. (Mikaela MacKenzie / Free Press files)

Angela Mathieson could not be happier about the timing of the appraisal report and some renewed interest in what sort of deal could be reached to acquire and convert the grand and stately building. (Mikaela MacKenzie / Free Press files)

Since then, an air of uncertainty has surrounded the building. It is too large and too costly to maintain for smaller tenants, and too old to be converted as-is into Class A commercial space. Architects have salivated at the prospect of obtaining commissions to remake the building as unique office space or adding residential units.

The city is in the process of seeking a historical designation for the building. Mathieson said this designation will not present any impediment to redevelopment. "The city has been pretty lenient about its requirements in projects like this," she added.

The price tag for these projects is nothing short of extraordinary. In the past, estimates of as much as $150 million have been floated for plans that would bisect the existing structure to turn it into four separate buildings, or the addition of shafts to bring exterior light into the now-dimly lit interior of the existing structure.

"The release of the appraisal is quite helpful. It puts the building and its value into current and proper context. It allows more people to imagine what it would look like when it's redeveloped." – CentreVenture CEO Angela Mathieson

These visions carry the promise of turning the Bay building into a new focal point of downtown activity, on a corner that already features hallmark buildings of the U of W and the Winnipeg Art Gallery. However, with HBC still clinging to two floors in the building, and no one with sufficiently deep pockets coming forward with a plan to reimagine the building, it remains stuck in development limbo.

HBC itself could press the issue if, as part of its plan to buy back shares, it decides to sell or abandon some of its real estate assets. If the Bay were to close its store operations, private sector developers might be prompted to come forward with a plan.

The city is in the process of seeking a historical designation for the building. (Ruth Bonneville / Free Press files)

The city is in the process of seeking a historical designation for the building. (Ruth Bonneville / Free Press files)

Mathieson said that ultimately, a consortium of public and private sector interests will be needed to realize a bold future for the Bay building. Tax increment financing -- where a portion of future property taxes are advanced to developers at the front-end of a project -- would be a very safe bet for government given the potential value of a redeveloped Bay building.

However, the current political environment does not offer much promise of public support.

The City of Winnipeg is currently engaged in a pre-budget process that has featured increasingly alarming warnings of service cutbacks to help keep a lid on expenditures. The province, meanwhile, continues its tight-fisted approach to fiscal management that makes Premier Brian Pallister look like an unlikely partner in this kind of project.

And yet, the Bay building isn't going anywhere. It's too big and old to reuse as is, but too important to ever consider tearing it down. Fortunately, various interested parties are still taking the time to call and to keep an eye on the building.

dan.lett@freepress.mb.ca

Dan Lett

Dan Lett
Columnist

Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year out of journalism school with a lifelong dream to be a newspaper reporter.

Read full biography

Your support has enabled us to provide free access to stories about COVID-19 because we believe everyone deserves trusted and critical information during the pandemic.

Our readership has contributed additional funding to give Free Press online subscriptions to those that can’t afford one in these extraordinary times — giving new readers the opportunity to see beyond the headlines and connect with other stories about their community.

To those who have made donations, thank you.

To those able to give and share our journalism with others, please Pay it Forward.

The Free Press has shared COVID-19 stories free of charge because we believe everyone deserves access to trusted and critical information during the pandemic.

While we stand by this decision, it has undoubtedly affected our bottom line.

After nearly 150 years of reporting on our city, we don’t want to stop any time soon. With your support, we’ll be able to forge ahead with our journalistic mission.

If you believe in an independent, transparent, and democratic press, please consider subscribing today.

We understand that some readers cannot afford a subscription during these difficult times and invite them to apply for a free digital subscription through our Pay it Forward program.

The Free Press would like to thank our readers for their patience while comments were not available on our site. We're continuing to work with our commenting software provider on issues with the platform. In the meantime, if you're not able to see comments after logging in to our site, please try refreshing the page.

You can comment on most stories on The Winnipeg Free Press website. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or digital subscriber to join the conversation and give your feedback.

Have Your Say

Have Your Say

Comments are open to The Winnipeg Free Press print or digital subscribers only. why?

Have Your Say

Comments are open to The Winnipeg Free Press Subscribers only. why?

By submitting your comment, you agree to abide by our Community Standards and Moderation Policy. These guidelines were revised effective February 27, 2019. Have a question about our comment forum? Check our frequently asked questions.