Manitoba

Downtown Winnipeg's landmark Hudson's Bay Co. building worth $0: real estate appraiser

Cushman & Wakefield's valuation said the building has a market value of $0, but technically it’s worth even less than that because it has a tax liability of $302,298. To sell, it would cost as much as $111 million to bring the building up to code.

Building would cost millions to sell, up to $111 million to bring up to code

The Bay has stood at the corner of Portage Avenue and Memorial Boulevard since it opened on Nov. 18, 1926. (Darren Bernhardt/CBC)

The iconic Hudson's Bay Company building on Portage Avenue is worth squat, according to an appraisal conducted by an independent real estate company.

Cushman & Wakefield's valuation said the building has a market value of $0, but technically it's worth even less than that because it has a tax liability of $302,298. To sell, it would cost millions of dollars, and up to $111 million to bring the building up to code.

"Most people in the real estate industry understand that this building is obviously a very old building," said Angela Mathieson, president of CentreVenture Development Corporation.

"In order to have another tenant come in and occupy the entire thing, a significant amount of upgrades to the building would have to occur."

Opening its doors in 1926, the department store was built to accommodate the demands of the time, measuring 655,755 square feet. In contrast, Winnipeg Square is just over 600,000 square feet.

The building's age, sheer size and design are at the heart of the issues, Mathieson said.

Once spread across its six floors, the retail section of The Bay is now condensed on the first two floors. (Darren Bernhardt/CBC)

"Previous studies have shown that the structure of the building is just fine, it's very robust. And obviously it's valuable from the perspective that it's a beautiful building," she said.

"But nowadays, we require a certain type of life-safety improvements. Whether it's fire suppression, even just our own standards of office or residential — in terms of the amount of control you have of your heating and cooling and ventilation systems — really requires that everything be removed from the building and be built from the inside, almost from scratch."

With little natural light getting in, atriums would have to be built in the middle. Mechanical systems such as heating, ventilation and air conditioning would also need to be installed, Mathieson said.

Heritage Winnipeg president Cindy Tugwell — who went to bat for the building to get its historical designation — said she has mixed feelings about the appraisal.

"It's a building that you absolutely have to have huge capital investment," Tugwell said. "You can't just say this building is on prime land, this is what it should be worth."

She also noted that now is not a good time to take over a building and redevelop, because there are already a number of new spaces being developed downtown that people are moving into.

The Hudson's Bay under construction in downtown Winnipeg in 1926. (hbcheritage.ca)

That said, the department store's historical designation (given in March) plays into Tugwell's hands, she says, because the building cannot be demolished, and someone can either get it on the cheap, or HBC might be willing to donate it.

"If it's worth virtually nothing to the Bay, there may be chances that the Bay may consider donating it to a non-profit charitable organization, or an umbrella group that could look at possibly getting some funding," Tugwell said.

"If the building, hypothetically, sold for $10 million but [HBC] donated it for a dollar, there's $10 million you're saving on a project right off the bat."

According to the appraisal, the building underwent renovations in 1986 and 1987. HBC invested $4 million to update the first, second and third floors, $200,000 on the sixth floor and $700,000 on the basement and fourth floor.

Only three of the building's six floors are currently occupied.

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