News

Western Canadian Place towers sold for $475 million to Chicago firm


This is the second major high rise purchased by Oak Street this year, which bought The Bow for $1.67 billion this summer

Article content

Western Canadian Place has been sold for $475 million.

Advertisement

Article content

The British Columbia Investment Management Corporation’s real estate arm QuadReal sold the twin-towered building to Oak Street Real Estate Capital out of Chicago in November.

This is the second major high rise purchased by Oak Street this year, previously buying The Bow for $1.67 billion this summer .

Article content

Duncan MacLean, the senior vice-president of CBRE Ltd., represented the vendor in this deal.

Greg Kwong, regional managing director for the Canadian Prairie region for CBRE, said there may be more sales of downtown office buildings to come.

“The best metric of real estate is to buy low and sell high,” he said. “Prices, because of the high vacancy rates, have dropped and investors from outside the market, specifically the U.S., have not lost their enamour or their long-term feel or optimism for Calgary.”

Advertisement

Article content

According to CBRE’s third quarter review of Calgary’s downtown office space, there was a 32.9-per-cent vacancy rate, including an 80,000 square-foot negative absorption between the second and third quarters. A fourth quart report is due out in the coming weeks and a continued downward trend is expected.

Article content

Western Canadian Place has been a Calgary landmark since its construction in 1983 at 700 9th Ave. S.W. The 1.06 million square-foot office building includes adjacent 40-storey and 31-storey towers on 1.5 acres on the west end of the central business district.

According to the Real Estate News Exchange, however, the class-A building has an 85-per-cent occupancy on a lease with Husky alone that runs through 2033. It is a similar situation to the class-AA Bow which has long-term tenants, making it an attractive purchase.

Advertisement

Article content

QuadReal is a Canadian-owned global real estate company based out of Vancouver and declined comment.

Oak Street is a private equity real estate firm based out of Chicago and did not return requests for comment.

The distinctive copper-coloured towers of Western Canadian Place have been a fixture in downtown since 1983.
The distinctive copper-coloured towers of Western Canadian Place have been a fixture in downtown since 1983. Photo by Gavin Young/Postmedia

The biggest vacancy issue has been in the B (45.2 per cent) and C (42.5 per cent) class buildings, with some completely empty and others more than half vacant. This represents about half of the downtown stock.

Owners in some of these buildings are seeking creative uses for these spaces. Sierra Place, for example, is being converted into six floors of housing and an additional four floors of shelter, transitional and support service spaces. The facility should open in 2022 after sitting vacant for several years.

Advertisement

Article content

Kwong said the sale of buildings is a good sign. It shows there is some optimism for the market to rebound, at least in the long term.

“Everyone agrees it’s not going to bounce back in the next two to three years, but the horizon for optimistic investors is just a little bit short of a return to normalcy,” he said.

The challenge ahead for the sector is attracting businesses and organizations back to Calgary’s downtown with about 15 million square feet of vacant office space.

Many of the vacancies have been created by oil companies streamlining operations or relocating their headquarters due to the pandemic and changing environment for the sector in Canada.

Kwong said that while the tech industry is growing and could potentially fill some of those spaces, it currently only represents less than five per cent of occupancy. He said tax breaks or subsidies are needed to lure companies to the city, similar to what is happening in the U.S.

“Most importantly, the political side of our narrative has to be more pro-business,” he said. “Last time I checked, if you don’t have a strong business sector or a strong core, a city really can languish for years. I hope our new council can get around that and look to start promoting Calgary as a great place to live, work and play.”

jaldrich@postmedia.com

Twitter: @JoshAldrich03

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.



Source link

Leave a Reply

Your email address will not be published.