City-owned downtown tower bleeds money

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This article was published 08/06/2021 (1296 days ago), so information in it may no longer be current.

As six of its 11 floors sit vacant, the city is losing $500,000 per year on the office tower attached to the Winnipeg Police Service headquarters.

That news comes just as talks proceed on one possible option to fill space in the structure.

In 2010, the city bought the office tower at 266 Graham Ave. and Canada Post’s former downtown building (that has since become police HQ). The city originally predicted it could sell the tower for $18 million, but later discovered it required extensive renovations that have since made it tough to lease or sell.

Currently, the city uses three floors and two floors are leased to third parties, said city spokesman Kalen Qually, in an emailed statement.

“Annual operating losses are approximately $500,000, but that does not consider the value of the space occupied by civic tenants,” said Qually.

He noted that until 2019, the city’s operating costs for the tower exceeded the rent it generated by $255,000 per year. After a remaining Canada Post tenant moved out at the end of 2019, revenue fell again, raising the city’s annual losses to about $500,000, said Qually.

Police Chief Danny Smyth recently said he’s discussing one option with property and development staff that could involve some police units move in to part of the space.

“It’s something that we’re exploring… It wouldn’t (take up) the whole tower. It would be one or two floors within the tower and, to be clear, it would be us shifting some of our operations into the tower and then using the existing space in headquarters to use as an expansion of our archives,” Smyth said.

The chief didn’t reveal which police units might move, if the plan is pursued. The police service need a permanent home for its archives, after a space to store them was removed from the new North District Police station construction project late last year.

Coun. Scott Gillingham, council’s finance chairman, said council must determine if the police and other potential tenants can use the tower in a way that offsets “significant” losses.

“It’s very significant, $500,000 is a significant amount of money any year, especially in years where we are struggling through the impacts of a pandemic on the city’s budget. It’s important that we maximize the use of every city facility… I’d like to see, if possible, all options explored to fill this building with tenants, or city departments,” said Gillingham.

The St. James councillor said it’s not clear how difficult it may be to fill the space now, as many companies determine whether or not their full workforces should return to downtown offices post-pandemic. He warned any proposal for the tower must be thoroughly assessed to ensure city renovation costs don’t exceed the financial benefit to taxpayers.

Coun. Jeff Browaty, chairman of council’s economic development committee, said he’s open to the police proposal if it’s financially viable.

“If there are legitimate (needs) for evidence storage, where there’s a business case that makes sense, I’m definitely supportive,” he said.

joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga