Canada Post is moving its mail-processing plant out of downtown Winnipeg, saying its building on Graham Avenue is out of date.

The Crown postal agency announced Tuesday that it intends to build a multimillion-dollar facility that will reflect the "modern post," equipped with upgraded mail-processing equipment and other technology. The new building will also be more environmentally friendly.

The building's location has not been determined, but is expected to be in an industrial area on the outskirts of the city.

Bill Davidson, general manager of operations for Canada Post's prairie region, told CBC News the agency needs about 10 hectares of land for the state-of-the-art plant.

The property on Graham Avenue will be sold.

New use for building

Pat Martin, the NDP MP for Winnipeg Centre, says closing the sorting plant will be a loss to the area.

"No matter how you slice it up, it's still going to leave a huge, gaping hole in the heart of downtown Winnipeg," he said.

Martin believes it will be very difficult to find a buyer — but Davidson said some interest has already been expressed in the site.

Ross McGowan, head of CentreVenture, the city's downtown development corporation, also believes the building won't be empty for long.

"It's a prime development site connected into the walkway system, and we think that a higher and better use is available for that," he said.  "A number of developers actually have come forward already."

The building has potential as a commercial, retail or residential development, McGowan said.

Jobs could be lost

Jim Phillips, president of the Canadian Union of Postal Workers, says the new facility could mean fewer jobs as it replaces the current four-storey facility.

"A one-level operation, there's a lot less travel involved, like portering, like elevators and whatnot, so it sort of just naturally cuts down on the time that it takes to process mail," he said.

The company is not leaving Winnipeg's core entirely; its downtown letter carriers will have a new depot at the old Midway Chrysler building on Portage Avenue near Broadway.

Martin hopes Canada Post will also keep its prairie region office, which employs more than 150 people, in the downtown area.

Canada Post has not yet made a decision on the location of the regional office.