2007 a record-breaking year

December 31, 2007
Winnipeg Free Press
Written by: Murray McNeill

Sun-X Properties sale led to $700-M buzz in boardrooms

Don White (left) and Brian Taillieu stand in front of Commodity Exchange Tower, a property they sold this year.

IT was billed as the largest commercial real estate transaction in the province's history, and last March's sale of the Sun-X Properties industrial portfolio proved to be a harbinger of the record-breaking year 2007 would be for Winnipeg's commercial real estate sector.

Colliers Pratt McGarry, a local real estate firm that tracks commercial property sales valued at $1 million or more, said there were more than $700 million worth of those transactions in the city in 2007.

"Our best year previous to this was probably somewhere between $475 million and $480 million," Don White, an investment broker with the firm, said in an interview. "So it's a significant jump in sales volumes. And it was for all product types -- apartment blocks, industrial, office and retail."

It was also a banner year for commercial leasing activity, according to Ken Jones, chairman of the commercial division of the Winnipeg REALTORS Association.

Buzz around the room

"In talking to almost every agent, there was a buzz around the room with everybody saying, 'Man, am I ever busy!,' " Jones said in an interview. "There was lots happening. Different guys (businesses) moving around, expansions here, contractions there. There was just a lot of action."

Jones said he wasn't surprised at the high level of activity.

"The economy is doing relatively well here, so everything is starting to reflect that. And that's the case with the real estate sector, as well."

What did surprise him was the number of out-of-province parties that have been checking out the local offerings.

He said his firm -- J.J. Barnicke Winnipeg Ltd. -- recently listed a distribution centre for rent and received inquiries from more than four out-of-province firms that were looking into the feasibility of setting up a distribution operation here.

One of them was a Vancouver company that looked at Calgary but was scared off by the high cost of real estate and the severe labour shortage. So it's looking at other cities, including Winnipeg.

"Our connection to the mid-continent trade corridor is also being mentioned more and more," Jones said. That and the city's central location, which is a bonus for national distributors.

White said he also noticed a lot more out-of-town investors poking around the Winnipeg market this year, including pension-fund investors, institutional money managers, and publicly traded real estate investment trusts. That, too, is no surprise, he added.

"We are just a more affordable town than Edmonton or Calgary right now. When it gets too expensive there, things spill over into other provinces. It's more evident in Saskatchewan, but we're starting to see it here now, too."

There was also an unusually large number of quality properties for sale this year in the city, White said. Three prime examples were the Sun-X portfolio (46 buildings and 35 acres of undeveloped land), the ADA industrial portfolio (16 properties) and the Century Properties Inc. office/industrial portfolio (six properties).
"There are a lot of succession-based reasons why people are selling," White said. It was also a good time to sell because of all the hungry buyers in the market.

Looking ahead to 2008, Jones said it has the makings of another good year.

"There are still lots of firms still looking for buildings and lots of investment dollars out there...," he said.

White agreed, but said there are also some wild cards at play that could have a big impact on the market.

One is the fallout from the U.S. sub-prime mortgage crisis. It's already made it harder to access mortgage and credit financing in Canada, and if the situation worsens, investors may start rethinking their investment strategies.

A second is what happens to the Canadian dollar and the impact that has on domestic manufacturers and exporters. And the third is whether construction costs continue to soar, which tends to drive up rental rates and property values.

"So it's a very positive time right now, but there are those three things to watch," White said.

murray.mcneill@freepress.mb.ca

Where the action was

HERE are some of the significant commercial real estate transactions that unfolded this year in Winnipeg:

Type of transaction: Sale
Type of property: Industrial/office
Size: More than 2.2 million square feet of space and 35 acres of undeveloped land.
Transaction value: Not disclosed
Date: March 2007
Agents: Private sale

Type of transaction: Sale
Address: 360 Main St.
Type of property: Office/retail
Size: 599,197 sq. ft.
Transaction value: More than $100 million
Date: August 2007
Agents: Brian Taillieu and Don White, Colliers Pratt McGarry

Type of transaction: Lease
Address: 360 Main St.
Type of Property: Class A office
Tenant: Canadian National Railway Co.
Size: 38,272 sq. ft.
Transaction value: Not disclosed
Date: October 2007
Agent: Paul Kuzina, CB Richard Ellis & Associates

Type of transaction: Sale
Address: 333 Main St. and 191 Pioneer Ave.
Type of property: Class A and B office
Size: 276,000 sq. ft.
Transaction value: Undisclosed
Date: January 2007
Purchase price: Undisclosed
Brokerage firm: Cushman & Wakefield LePage

Credit Union Central of Manitoba

Type of transaction: Sale
Address: 317 Donald St.
Type of property: Office
Size: 84,408 sq. ft.
Transaction value: Not disclosed
Date: 2007
Lead broker: Sandy Shindleman

Type of transaction: Sale
Type of property: Industrial
Size: 949,645 sq. ft.
Transaction value: $41.5 million
Date: November 2007
Agents: Brian Taillieu and Don White

Purchaser: University of Winnipeg
Type of transaction: Sale (land assembly)
Size: 145,216 sq. ft.
Transaction value: Not disclosed
Date: August 2007
Agent: Marcel Chartier, CB Richard Ellis Chartier & Associates

Type of transaction: Sale
Type of property: Office/industrial/retail
Size: 313,106 sq. ft.
Transaction value: $26.5 million
Date: August 2007
Agents: Brian Taillieu and Don White

Type of transaction: Sale
Address: 365 Osborne St.
Type of property: Office
Size: 75,896 sq. ft.
Transaction value: $14 million
Date: March 2007
Lead broker: Ian Corbett, Shindico

Type of transaction: Long-term lease
Address: 1600 Ness Ave.
Type of Property: Retail
Tenant: National grocery store chain
Size: 50,000 sq. ft.
Transaction value: Not disclosed
Date: October 2007
Agent: Derrick Chartier, CB Richard Ellis & Associates

Type of transaction: Lease
Type of property: Class B office
Tenant: EISI
Size: 43,234 sq. ft.
Transaction value: $2.3 million
Date: December 2007
Brokerage firm: Cushman & Wakefield LePage

Type of transaction: Lease
Type of property: Retail
Tenant: Indigo Books & Music
Size: 18,000 sq. ft.
Transaction value: $4 million
Date: December 2007
Brokerage firm: Cushman & Wakefield LePage