November 14, 2019

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Opinion

Downtown ripe for development

True North Square, Skycity Centre on the drawing board

Ryan Behie of CBRE says the Winnipeg market has done well to let demand determine development, unlike some markets.

BORIS MINKEVICH / WINNIPEG FREE PRESS

Ryan Behie of CBRE says the Winnipeg market has done well to let demand determine development, unlike some markets.

Hey there, time traveller!
This article was published 30/11/2015 (1445 days ago), so information in it may no longer be current.

Hey there, time traveller!
This article was published 30/11/2015 (1445 days ago), so information in it may no longer be current.

Winnipeg is one of the few markets in Canada where there is no downtown office construction at the moment, but one national real estate firm thinks that could change in 2016.

"Expect there to be more clarity around proposed Class A office construction projects in 2016," CBRE Limited says in its recently released 2016 Canadian Real Estate Market Outlook report.

"Tenant desire for quality space and investors needing to place capital has resulted in significant office construction cycles in other Canadian cities and may spur new office construction in Winnipeg as well," the report says.

Ryan Behie, vice-president and managing director with CBRE's Winnipeg office, said in a followup statement "cheap capital," rather than market demand, is driving some new office development in other Canadian cities.

As a result, "The construction of new office towers has been somewhat disconnected from market fundamentals," he said.

The Winnipeg market has done a better job of avoiding that kind of disconnect by letting demand determine when developments proceed, Behie said, and globally, there is a growing demand for newer, more efficient office space.

"Winnipeg owners are not immune to this flight to quality," Behie said. "Which may help kick-start a new office development."

Behie didn't say how many new developments CBRE thinks might get the green light in 2016, or which ones they might be.

However, Wes Schollenberg, managing partner for Avison Young Commercial Real Estate (Manitoba) Ltd. said the two developments currently under discussion are the True North Square project and the Skycity Centre project. Both are mixed-use developments that include an office component.

Plans for the $400-million True North Square development include two office/retail towers — one 19 storeys high and the other nine — and a 27-storey hotel/condominium tower. Plans for the 45-storey Skycity Centre condo/office/retail tower call for about 60,000 square feet of office space on two floors in the tower's podium.

Schollenberg agreed it's possible both projects could get underway in 2016, although that might be a tall order in the case of True North Square, he added.

"There's still so much planning and design work to do," he said. "And they would have to have a very large (office) tenant or tenants to take that plunge."

A True North official said in late September the developer was in negotiations with six "serious" parties and hopes to announce a deal in about 60 days.

Schollenberg said one of the reasons there hasn't been more new office development in downtown Winnipeg is because the leasing rates for newly built space are high.

"There is a modest demand for shiny new space, but that demand has to equal the market price and the construction costs and the land value. That's where the difficulty is."

He said it's also difficult to find private-sector tenants who are willing to commit to a long-term lease, which is usually what most developers want.

"Governments typically have no problem committing, and that's why they're very sought-after tenants."

Behie said Winnipeg could also see some new industrial developments in 2016 as tenants, particularly manufacturers, continue to benefit from a combination of low energy prices and favourable currency exchange rates.

"Demand for new industrial space remains constant as modern users are requiring more specialized real estate. This has resulted in the redevelopment and repurposing of existing buildings," he said. "However, no building is 100 per cent future-proof, and so we may see further new development in the industrial asset class in 2016."

 

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 204-697-7254.

murray.mcneill@freepress.mb.ca

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History

Updated on Monday, November 30, 2015 at 8:18 AM CST: Replaces photo

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