Hey there, time traveller!
This article was published 16/8/2018 (530 days ago), so information in it may no longer be current.
With the shiny new towers of True North Square dominating downtown development, Portage Place, once seen as the cornerstone for revitalizing the area, has become a forgotten stepchild.
However, the mall’s fortunes may change now that it has been put up for sale.
A walk through the mall just before stores opened on a weekday morning is unremarkable but not nearly the dysfunctional eyesore so many Winnipeggers love to hate.
Peterson Group of Vancouver, the owner of the mall since 2005, has been actively trying to sell it for more than a year (some say it’s been much longer than that). Although officials from the company did not respond to requests for interviews, several sources have confirmed the Peterson Group "wants out."
Bricks-and-mortar retailing is experiencing widespread disruption at the hands of e-commerce and Portage Place never really achieved the kind of destination-shopping status it aspired to in its original concept. Like many downtown malls, it has struggled over the years to find the right mix.
Nowadays, you don’t see much of the pizzazz at Portage Place that you might see at other malls. There’s no Apple store, no high-end apparel shops and no children’s amusement destinations. In the space Holt Renfrew once occupied to much acclaim, Stitches, the mid-market clothing store is now operating. There are sports-related shops, mid-market street apparel and a number of professional services office such as dentists, chiropractors and a number of social service agencies. There are plenty of discount stores and one of the biggest Dollarama stores in the city.
The food court does not look much different than when it first opened. The Imax Theatre and tri-plex movie theatres closed years ago and those spaces remain dark.
Yes, there are a few vacancies, but probably not as many as people think. You can still find mall standards such as Shoppers Drug Mart and Staples and the big three phone companies all have shops sides by side.
Highly regarded industry professional, Avtar Bains of Vancouver-based Premise Properties (who also did not return phone calls) is marketing the property. Sources say there has been interest, but no deal has been closed.
Many believe one of the things that has thwarted hopes of a straightforward market transaction is the complicated ownership structure of the property. The Forks North Portage Partnership owns the land, the underground parkade and the development air rights and derives about $3 million in revenue from those assets, funds that the mall owner might otherwise have to use at its own discretion on the property.
Paul Jordan, CEO of The Forks, is matter of fact in his analysis of the situation.
"He (the Peterson Group) can’t sell his piece because he does not own the land, and we can’t invest in the property because we don’t own the mall," Jordan said. "It’s a catch 22. It really is the roadblock to moving this thing along."
North Portage Development Corp., the publicly owned entity that was charged with developing the area, still owns the land leases on the mall, Fred Douglas Place and Place Promenade. It merged with the Forks Renewal Corp. in 1994 to form The Forks North Portage Partnership. The merger was at least partially done to help provide financial stability to The Forks, which was on delicate financial footing at the time.
The catch 22 scenario of the mall ownership also provides the underpinning that has led to the success of The Forks. Without the land lease and parking revenue from Portage Place, The Forks may not have been able to become successful.
"Back in 1994, (The Forks was) borrowing money to pay salaries," Jordan said. "It was that bad. We were about to close. North Portage gave us new life with a revenue stream to develop The Forks."
The irony there is that many believe the mall also needs new life. Some say the property, which had a mandate to revitalize North Portage, has failed.
By most accounts, the value of the property has declined. When Cadillac Fairview opened the mall in 1987 at a cost of about $92 million, it was being was touted as the saviour of downtown Winnipeg. But when it was sold to Consolidated Properties in 1997, it reportedly went for about half the original development cost. The sale price to Peterson Group in 2005 was never disclosed, but it’s believed it was less than half of what Consolidated paid.
Scott Hutcheson, executive director of Calgary-based Aspen Properties, the successor to Consolidated Properties, believes Portage Place has been unfairly maligned.
"Is it the the gem of retailing on the planet? No. But look at what might have been there," said Hutcheson, chairman of Calgary’s 2026 Olympic bid committee. "I would not say it failed. It wasn’t the messiah, but it has been a good property for Winnipeg."
It has been controversial since it opened. In hindsight, it’s not so surprising since the assembly of the land to build the mall was the result of public-sector expropriation to the tune of millions of dollars.
Dayna Spiring, CEO of Economic Development Winnipeg, said there has been interest from Toronto investors. At least part of the attraction to the property is the possibility of building towers on both the east and west ends of the mall, which were built to handle those structures. With True North Square’s recent construction of the first new downtown office building in Winnipeg in 30 years, along with a new residential tower, demand for additional development would be questionable.
"The problem is no one wants to do the improvement needed at Portage Place because you only own the building, you don’t own the land," Spiring said.
Jordan said there have been talks over the years and a full understanding that for a transaction to occur, some sort of arrangement will have to made between The Forks and the mall owner. The Forks conducted some studies a few years ago to see if it was feasible to buy the mall itself.
"In any kind of sale, if and when it goes forward, the two of us are going to have to be married or arrange some sort of split," Jordan said. "We could sell the lease, but the mall owners are not interested. They have made it pretty clear they would like to sell and get out."
Although it might make it easier to sell, the property, the mall owners would have to double down on their investment in a mall that they are trying to sell.
"All those options are available. It’s just we have not found a successful one yet," he said.
Some would say that the public-sector commitment to the revitalization of the neighbourhood was effectively accomplished with the construction of the mall and the housing developments — Fred Douglas Place and Place Promenade — immediately to the north of the mall.
But some, such as Angela Mathieson, the CEO of CentreVenture, are not so convinced.
"It (Portage Place) is such an important central feature in our downtown," she said. "We would be highly supportive of options that would see it renewed and brought back to a positive and active centre in the city."
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.