The rare sale of a Regina office property last month highlights the opportunities for investors with a long-term vision.
Broad Street Crossing, at 1800 11th Ave., Regina, sold July 8 to Toronto’s Sunray Group, which owns the adjacent Wingate by Wyndham, a 118-room hotel that’s set for conversion to a Towneplace Suites by Marriott. Terms were not disclosed. The property is assessed at $9 million, according to City of Regina data.
Built together with the hotel in 2009 as part of a redevelopment of the former Army & Navy department store on the site, Broad Street Crossing shared its 170 underground and surface parking stalls with the Wingate.
“The two properties share both structured and surface parking, driving operational efficiency and enhancing long-term value,” remarked CFO Capital, which arranged financing for the transaction.
“It was a strategic buy for us, in order to enhance and improve upon our hotel operations at the Wingate,” Sunray president and COO Kenny Gibson told Western Investor. “We really needed the parking, but we weren’t afraid of the office building.”
Tenants of the 30,000 square feet of commercial space at Broad Street Crossing include the Canadian Food Inspection Agency, Impark and Tim Hortons.
The off-market transaction unfolded quietly, with Sunray approached first because of its use of the parkade.
“We were approached first because of the proximity to the hotel,” Gibson explained. “It was a move for us to protect our investment there at the hotel, and the office building and the Tim Hortons provide some ongoing income as well.”
The purchase came at an opportune time for Sunray, which plans upgrades to the property as part of its rebranding. These include the potential addition of event space or even an indoor pool.
The confidence behind those plans also drove its confidence in the office asset, with its mix of steady, long-term tenants.
“We like the market there for what we have,” Gibson said. “If you have a long view in Western Canada, I think the investments will pay off in spades in a few years.”
Built in 2009, Broad Street Crossing is one of the few Regina office assets to trade this year.
“It probably would have sold for a decent dollar,” remarked Linely Schaefer, managing director in the Regina office of real estate services firm Avison Young (Canada) Inc.
Avison Young listed two major Regina office assets for sale this spring, including Harbour Landing Business Park, a fully tenanted development on 7.6 acres with 82,978 square feet of space across two three-storey office buildings and a stand-alone Tim Hortons. The asset is listed at $38 million.
The other asset, South Broad Plaza, was built in 2000 and offers 133,890 square feet of space, with just one vacancy on the main floor of about 6,700 square feet. The list price is $32.5 million, or $242.74 per square foot. The property is assessed at $19 million, according to civic records.
Both properties enjoy prime locations with strong occupancy in a market where office vacancies are in the 13 per cent range. However, investors have been cautious, looking to price in a better rate of return before seizing the opportunities.
“We’re trying to get a seven [per cent] cap on them,” Schaefer said, a rate below that seen elsewhere in the province. “We haven’t had too many takers just yet.”
