Who's shopping for BlackBerry's real estate?
2 million square feet of "hard to come by" commercial real estate up for grabs in Waterloo alone
BlackBerry is selling 15 office buildings in Waterloo Region, totalling more than 2 million square feet of commercial real estate, and according to one commercial real estate insider in Waterloo, investors are already eyeing what are considered to be some very hot properties.
"There's absolutely an appetite for it," Karl Innanen, the Managing Director of Collier's International in Waterloo told The Morning Edition host Craig Norris Thursday, adding there's an open secret about commercial real estate in Canada.
"Something that a lot of people don't know is commercial real estate, especially good quality investment real estate, is hard to come by these days," he said.
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"We had buyers up from the States, there are buyers in from overseas, there are local buyers and large Canadian pension funds and real estate investment trusts that would absolutely like parts of this portfolio."
3 types of potential buyers
"There are actually three different types of buyers for these buildings," Innanen said, adding the fate of the 15 buildings up for sale in Waterloo Region depends on whether the tech giant plans to lease them back after they're sold.
"So if BlackBerry leases back buildings, then pure investors would buy them," he said. "By pure investors, I mean people who just want cash flow, so pension funds, insurance companies, real estate investment trusts."
"If the buildings are vacant, then [it's] users. Other companies that need space would use them," Innanen said, adding that the third type of buyer would be what he called 'a hybrid.'
"Somebody that would buy a vacant building and possibly change it and fix it up and try to attract tenants to the building," he said.
BlackBerry consolidating in north-end Waterloo
When BlackBerry announced it was selling most of its Canadian real estate holdings Tuesday, the tech giant also adamantly promised it would remain anchored in Waterloo Region.
Innanen said that while many of its buildings in north-end Waterloo are up for sale, the smartphone maker would likely lease them back.
"My understanding is BlackBerry really wants to consolidate to what I would call the RIM park campus up in the north end," he said.
"They'll lease that back probably for the long term. That would be very attractive for an investor just looking for cash flow from a good tenant."
BlackBerry did not put a value on the properties being sold. Without knowing how much of BlackBerry's office space is vacant, it is difficult to speculate on its commercial value, Innanen said.
'Absolutely not a fire sale'
"We don't know how much will be occupied by BlackBerry and how much will be vacant," he said."But when we just look at ballpark numbers, we're talking about something in the neighbourhood of $300 million to $350 million."
Innanen said he came up with that figure based on a recent purchase of 300,000 square feet of former BlackBerry office space by University of Waterloo for $41 million near its campus.
"That's about $136 a square foot, so when we extrapolate that into the other buildings that's where we come up with the $300 million," he said.
"It is the going rate. It's absolutely not a fire sale and they're doing it in a very controlled way."