Fate of historic Bay building in limbo

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This article was published 20/06/2017 (2746 days ago), so information in it may no longer be current.

Don’t expect to see a “for sale” sign on the Hudson’s Bay Company’s historic downtown building any time soon, one prominent Winnipeg retail developer said Wednesday.

Although a U.S. activist shareholder is pressuring the struggling retailer to sell, spin off or redevelop some of its properties, Shindico Realty Inc. president and CEO Sandy Shindleman said the downtown Winnipeg store wouldn’t be one of the properties the shareholder has in mind.

“Winnipeg doesn’t rank very high on their radar screen when they’re looking to find value in the Bay’s real estate assets,” Shindleman said.

“I would say their leases at Polo Park and St. Vital (where the company also has retail outlets) would have a higher value than the downtown store they own. They have absolutely incredible leases there… that they could sell to the landlords or whatever.”

He also noted HBC has properties in cities like Toronto, New York, Boston and Chicago that are a lot more valuable than its Winnipeg store.

Shindleman is well versed in the challenge of trying to find a new use for the nearly empty six-storey building at the corner of Portage Avenue and Memorial Boulevard. Shindico spent much of the previous decade unsuccessfully trying to find new tenants for the 650,000-square-foot building, which would have helped pave the way for its redevelopment.

“But nobody was going to move in there,” he said. “So they are not going to find a buyer all of a sudden… because of this activist investor. That’s not going to happen.”

The president and CEO of the city’s downtown development agency — CentreVenture Development Corporation — Angela Mathieson also said the Winnipeg building “would be a very, very small asset in the context of the other assets they would be looking at first.”

And because of the costs that would be involved, HBC isn’t likely to try redeveloping the building on its own, she added.

“That would only go to exacerbate the problem they have, which is too much debt.”

Mathieson agreed the key to redeveloping the building is in finding new tenants to fill the top four floors the Bay is no longer using.

“But if you can find tenants for a building of that scale, who are willing to pay close to market rents, a plan could be developed, for sure,” she added.

Mathieson recently estimated it could cost upwards of $150 million to redevelop the building, and most observers believe it would be extremely difficult to do without some sort of government involvement.

Shindleman suggested the best thing to do is to let HBC figure out what to do with the building.

“The local people are saying, ‘We’ve got to do something with the Bay, we’ve got to do something with the Bay.’ The Bay (building) isn’t our problem yet. Leave it as the Bay’s problem.”

But the CEO of the Downtown Winnipeg Business Improvement Zone thinks otherwise. Stefano Grande said the downtown business community would love to see the pressure from U.S. activist shareholder Land & Buildings Investment Management LLC result in the Bay building being put up for sale.

“There is an appetite for good properties in our downtown and it is getting stronger every day,” he said. “So I think the time is the best it has ever been in terms of interest in our downtown and optimism.”

Grande said the Bay building is also too important to the downtown and to the city’s history to let it remain in limbo indefinitely.

“It’s the gateway to the downtown. When people arrive from Portage Avenue or are coming from Osborne Village, they’re greeted by this incredible, majestic building,” he said.

“Of all the important buildings that are in the downtown, that one would be in the top 10 for sure.”

HBC said in a statement earlier this week it is reviewing Land & Buildings’ request and “will respond in due course.”

murray.mcneill@freepress,mb.ca