The office portion of True North Square – the new heart of downtown Winnipeg – does not open until the third quarter of this year but half of its landmark office tower is already leased.
The 17-storey tower, 242 Hargrave, is the first privately developed office tower built downtown in nearly three decades.
In July the tower welcomed law firm Thompson Dorfman Sweatman LLP (TDS) , which has leased the top two floors as well as most of the 15th floor.
Keith LaBossiere, managing partner of the 130-year-old law firm, said more than $14 million was spent on the space, including on technology and furniture.
“We moved into the last major office building, 201 Portage in 1990. We were the lead tenant there and we wanted to do the same here. It feels good to be not just a part of something but leading something. We know that the next generation of lawyers at our firm want to continue that legacy by investing in downtown,” he said.
The soon-to-be four-building, $400 million True North complex is a wrist shot away from Bell MTS Place, the home of the Winnipeg Jets, which are owned by True North Sports & Entertainment. TDS is the official law firm of the NHL club.
When True North is totally completed in three years, it will have offices for more than 1,500 employees, 288 hotel rooms and 324 apartments and condominiums.
Other tenants who will be moving in over the next few months include the accounting firm MNP LLP, which is also relocating from 201 Portage to take 53,500 square feet at True North, Scotiabank and a number of retailers.
The churn of office tenants is affecting the downtown office market, particularly 201 Portage, which has also seen the departure of TD Bank and TD Wealth Management from the landmark tower.
“This will create a large amount of contiguous vacant space,” said Brad King of Cushman & Wakefield in a report on the city’s office sector. But King noted that Taylor McCaffrey LLP has taken 33,000 square feet in the building, “a positive step in the right direction.”
For this year, Winnipeg’s office direction has mostly been up. Leasing rates in the office market have increased to an average of $27.17 per square foot as of the first quarter, up from $24.87 a year earlier, Cushman & Wakefield reported, despite net absorption through the first three months of this year going negative by about 27,000 square feet. The office vacancy rate has fallen to 6.7 per cent, down from 7.8 per cent in the first quarter of 2017.
The office battle in Winnipeg could be fought in the central business district as owners of older buildings compete to attract and retain tenants.
Leasing agents say tenants can expect to be offered improvement allowances and significant upgrades to common areas.
There will be distinct pressure on the Class B office sector downtown, which is facing an 8.4 per cent vacancy with the loss of 54,000 square feet in net absorption during the first quarter.
Less than three months since the opening of Winnipeg’s last fully serviced industrial park, another one is coming on the market in CentrePort.
Winnipeg-based Whiteland Developers has started marketing an 80-acre industrial park called BrookPort Business Park, a $26 million project located on the west side of Brookside Boulevard, north of Inkster Boulevard and just south of the planned Chief Peguis Trail extension. Construction started on sewer, water and roadways in August. Shindico is handling the marketing and offering 25 industrial lots.
Satpal Sidhu, president of Whiteland, said there has been strong early demand for the new project, which will feature the possibility of smaller lot sizes – a minimum of 1.5 acres – with the possibility of assembling contiguous lots as large as 23 acres.
The development comes on the heels of Crystal Properties’ successful Brookside Industrial Park Phase 3, which fronts the south side of CentrePort Canada Way that sold about 70 per cent of its space after only nine weeks on the market. Brookside will be the site of a National Research Council’s advanced manufacturing research and development facility.
The Southwest sector also has industrial lots for sale, with occupancy in the Bishop Grandin Crossing development slated for spring of next year. Parcels start at $695,000 per acre, the highest industrial land values in the city, due to its proximity to major residential enclaves and retail developments.
The Southwest also has Winnipeg’s lowest industrial vacancy rate, at 0.1 per cent, and the highest average lease rates, at $10.50 per square foot.
Bargain hunters may want to steer farther southwest into the Rural Municipality of MacDonald, which abuts the city and has highway access but offers much lower land values, said Trevor Clay, a principal with Capital Commercial Real Estate.
The industrial vacancy rate in Winnipeg in the second quarter was a tight 2.5 per cent, Colliers International reports, down from 3.6 per cent a year ago. The average lease rates are holding steady at around $7.30 per square foot.
The opening of the new 95,000-square-foot Lowe’s in the Keneston retail corridor and the completion of the Outlet Collection Winnipeg mall last year are an indication of a solid retail environment. The new Bridgwater Town Centre, also in the Southwest, is now open and fully leased.
The action this year may pivot towards downtown. Investors are looking at the historic Hudson’s Bay store as a possible purchase and refit opportunity.
Winn Adair, a commercial realtor with Sutton Group Kilkenny in Winnipeg, is quarterbacking a group that has raised more than $20 million to revitalize the building, which was built in 1926.
One possibility is building a tower on top of the existing structure, which could house up to 30 condominiums.
There is about 120,000 square feet of retail space presently under construction in Winnipeg, all scheduled to come on stream this year, adding to the 250,000 square feet that was completed in 2017, most as part of Phase 5 of Preston Crossing.
Winnipeg’s retail vacancy rate is now in the 4.3 per cent range, but that could drop once vacant space left by Sears, Tiger and Wholesale Sports is totally backfilled, Clay said.
Winnipeg’s multi-family apartment market is benefiting from a growing population, including immigration, which boosted the city’s population to nearly 750,000. The overall vacancy rate has remained in the 2.8 per cent range for the past three years while rental rates have steadily increased, said Canada Mortgage and Housing Corp.