Manulife Place Renovations | 145.99m | 36s | AIMCo | MdeAS

[Gronk!]

The former Holt Renfrew as seen from the pedway to ECC

 

[CaptainBL]

Heard from one of the commercial brokers this week that this building is being privately shopped for $120 per sq.ft. Office space is just over 30% vacant and retail, well, the bottom floor is soon to be 100% vacant with Henry Singer leaving and second floor isnt much better. The renovation plans for this are dead with AIMCo looking to reduce their extremely underperforming Edmonton office exposure.

For comparison, CWB tower sold for just over $200 per sq. ft. during COVID, and CWB tower is an inferior asset and location and CWB the bank itself had already advised it would be leaving once its new tower was complete.

This folks, coupled with the lack of interest in the BMO site right across the street, are additional data points in a trend that is the continued state of downtown.

 

[northlands]

Heard from one of the commercial brokers this week that this building is being privately shopped for $120 per sq.ft. Office space is just over 30% vacant and retail, well, the bottom floor is soon to be 100% vacant with Henry Singer leaving and second floor isnt much better. The renovation plans for this are dead with AIMCo looking to reduce their extremely underperforming Edmonton office exposure.

For comparison, CWB tower sold for just over $200 per sq. ft. during COVID, and CWB tower is an inferior asset and location and CWB the bank itself had already advised it would be leaving once its new tower was complete.

This folks, coupled with the lack of interest in the BMO site right across the street, are additional data points in a trend that is the continued state of downtown.

Man it’s a ghost town in Manulife. I’m surprised it’s only 30% vacant.

 

[kcantor]

^^
shouldn’t that be attributed to either hedgehoppers anonymous or jonathan king?

 

[cmd uw]

And in other news Manulife might be home to CWB’s new HQ. Can’t make the numbers work on the Ice District tower, which isn’t surprising given the cost of construction and interest rates. You need rates $50/sf to make sense, that’s across the board and I don’t think there are any deals at those rates in Canada.

In other news deals are still being done in the office market. Good assets still getting traction.

 

[Gronk!]

Man it’s a ghost town in Manulife. I’m surprised it’s only 30% vacant.

The escalator renovations that started in June likely haven't helped matters.
Ace seem to be doing quite well with their pop-up. Still waiting for their permanent location to open though.

 

[kcantor]

^^
imho cwb in manulife would be a better deal for downtown overall…

 

[Glenco]

Heard from one of the commercial brokers this week that this building is being privately shopped for $120 per sq.ft. Office space is just over 30% vacant and retail, well, the bottom floor is soon to be 100% vacant with Henry Singer leaving and second floor isnt much better. The renovation plans for this are dead with AIMCo looking to reduce their extremely underperforming Edmonton office exposure.

For comparison, CWB tower sold for just over $200 per sq. ft. during COVID, and CWB tower is an inferior asset and location and CWB the bank itself had already advised it would be leaving once its new tower was complete.

This folks, coupled with the lack of interest in the BMO site right across the street, are additional data points in a trend that is the continued state of downtown.

Given AIMCO’s recent track record this is probably the worst time to sell.

 

[kcantor]

Given AIMCO’s recent track record this is probably the worst time to sell.

for the big players, it’s never just the value of the asset today and whether it’s at a historic high or a historic low. it’s about the value of the asset in 10 years vs the value of potential alternative investments in 10 years (or whatever their investment horizon is) whether those alternatives are industrial space in the golden horseshoe, canadian or international equities, canadian or international bonds, canadian or foreign currencies.

at $120 psf (if that is the number), selling the building today would net roughly $100 million. reinvested at 10%, that would be worth roughly $235 million in 10 years.

leasing the current vacant space could well cost $25 million. releasing the current leased space as leases expire could well cost another $25 million while capital upgrades and renovations could easily require another $50 million.

the building would then have to be worth at least $335 million - or $390 psf - at the end of that 10 years (the $100 million they could get for selling it today, the $100 million it will cost to own it over the next 10 years, plus the $135 million they could earn elsewhere over those 10 years) for it to make sense not to sell it for $120 psf today.

 

[David A]

The escalator renovations that started in June likely haven't helped matters.
Ace seem to be doing quite well with their pop-up. Still waiting for their permanent location to open though.

Yes, escalator renovations sure seem to take a while, but I suppose probably the time to do it when the main floor is fairly empty. The main floor is bleak, but the pedway level is a bit better.

I wonder if the people managing the building have run out of ideas or if they don't really have any. Its particularly tough because the retail in this building was a more upscale, I suspect it is even harder to attract similar tenants to replace those that left.

 

[CaptainBL]

And in other news Manulife might be home to CWB’s new HQ. Can’t make the numbers work on the Ice District tower, which isn’t surprising given the cost of construction and interest rates. You need rates $50/sf to make sense, that’s across the board and I don’t think there are any deals at those rates in Canada.

In other news deals are still being done in the office market. Good assets still getting traction.

Interesting, I have not heard that. Understand on $ per sq. ft. basis; however, CWB's motivation for a new tower was that it allowed for future growth, which I am not sure how moving to Manulife really solves that part of the equation on an increase in sq. ft basis.

 

[kcantor]

^
my guess is that with manulife being a larger building with a greater mix of suite sizes and expiry dates, future expansion would likely be more flexible than in a new building, not less, for both cwb and the owner.

 

[Gronk!]

If CWB decides to move their HQ to Manulife then what happens to their ICE District tower? Will they open a bank branch in ICE District instead, or abandon it altogether?

 

[kcantor]

^
that tower was originally intended to be residential and the foundations, parkade, cores and stairwells, and design loads were set and constructed accordingly.

while anything can be done if enough money is spent, the additional costs and compromises needed to change from residential to office may well be what would be a changed of heart for one or both parties.

the tower itself will likely proceed as initially contemplated if that’s the case so it will simply be a “nothing ventured nothing gained” pursuit of options in a difficult market.

 

[thommyjo]

^
that tower was originally intended to be residential and the foundations, parkade, cores and stairwells, and design loads were set and constructed accordingly.

while anything can be done if enough money is spent, the additional costs and compromises needed to change from residential to office may well be what would be a changed of heart for one or both parties.

the tower itself will likely proceed as initially contemplated if that’s the case so it will simply be a “nothing ventured nothing gained” pursuit of options in a difficult market.

Yeah, I hope it means the planned tower becomes 25-40 stories of more reasonable rentals ($1400-2300s). Area needs more bodies and the premium stuff is over saturated.