emolished early in the new year, construction will begin on a multi-use facility featuring five storeys of retail and office space, topped by a 14-storey hotel with 154 rooms.
Cindy Rodych, vice-president at Stantec, the architect of record for the SHED, said a key part of the development will be the transformation of a surface parking lot in-between the MTS Centre and the convention centre. She said much of the SHED is shaped like a doughnut and this lot is the doughnut hole.
Destination
"Something has to happen on this site. A SHED isn't and can't just be a district; it has to be a destination. What has been proposed in the master plan is a destination element for the public, active, vibrant, urban and an entertainment-focused area," she said.
Rodych said the hope is that the area will ultimately resemble the intersection of Dundas and Yonge streets in Toronto.
Much of the anticipated success for the SHED is contingent on downtown Winnipeg attracting more workers - say another 1,000 - during the day. Rodych said with Stantec moving between 200 and 300 staff into its new headquarters for the first SHED project, she doesn't see this as being a problem.
This new activity and more is translating into a healthy real estate market for the city, experts say.
Retail vacancy rates are currently sitting around 3.5 per cent, after being as high as 5 per cent over the last decade. They're even lower right now in the power centre sector at 0.7 per cent.
Office vacancy rates are on the upswing at 6.9 per cent, a rise from 4 per cent a few years ago, thanks primarily to the construction of Manitoba Hydro's new downtown office tower a couple of years ago. The addition of the nearly 700,000-square-foot building has caused a bit of a glut in the market.
"When you add that much space to the market and pull all their occupancies from other areas in the city, you create an artificial high on vacancy. That will smooth out over time as absorption occurs," said John Pearson, a commercial leasing specialist with Shindico Realty Inc.
Industrial vacancy rates, meanwhile, are hovering in the 5 per cent to 7 per cent range.
New stadium
Despite the relative lack of activity in Winnipeg's industrial market, there is no question that it's the dominant force in the city's commercial real estate sector. There is approximately 70 million square feet of industrial space in Winnipeg compared with just 15 million square feet in each of the retail and office markets.
Pearson said a combination of positive factors, including the new air terminal building and the excitement surrounding the hockey team, is attracting investment in the downtown area for restaurants, hotels and offices.
The construction of a new stadium at the University of Manitoba for the CFL's Winnipeg Blue Bombers, which is scheduled to open next spring, has also created a substantial investment opportunity for the continued redevelopment of the area north of Polo Park Shopping Centre. That's where the old Winnipeg Arena was demolished several years ago and where the antiquated Canad Inns Stadium hosted its last football game a few weeks ago. The football stadium is scheduled to be torn down next spring.
Wayne Pratt, managing director of the Winnipeg office of Colliers International, said there is regular sales and leasing activity occurring across all real estate sectors and the outlook for the supply and demand balance is good.
He said rents are going to have to increase, however, in order for any construction cranes to appear on the skyline.
"Construction costs are continuing to increase. For new construction to occur, rental rates need to be higher for the numbers to work," he said.
Pratt said the biggest driver in the market is "natural demand" because developers resisted the urge to overbuild in Winnipeg in past years.
"There's an aging process and a functional obsolescence that requires replacing buildings. A number of companies, when they have the demand, are prepared to pay the [higher] rate to get the new facility. It happens selectively in our market, it doesn't happen broadly," he said.
In-migration
Pratt said the recent wave of positive news in Winnipeg is reflected in rising immigration and the growing retention of young people, two areas where the city was challenged a decade ago.
He said the fact Winnipeg's economy has performed well against a backdrop that included a global recession a couple of years ago and growing debt crises in the U.S. and Europe bodes well for future real estate investment.
"Money is always looking for a return. Equity markets and global scares make Winnipeg look like not a bad place to invest. That's when you get private and public money interested in buying into the Winnipeg market," he said.
Ron Hambley, executive vice-president of the Winnipeg Construction Association, said the past decade has already been the strongest in his industry in the last half-century.
Manitoba is coming off its third consecutive year in which the construction sector topped the $2 billion mark. That's a far cry from the $14 billion spent in Alberta but it's also a significant increase from the $700 million that was spent in Manitoba in 1999.
"These are solid numbers for a small province. We've been quietly growing and doing our business in Manitoba. There's still lots of work in the hopper," he said.
from Western Investor January 2012
