'Deep pockets and a pretty neat vision' needed to redevelop downtown Winnipeg Bay building

When the Queen's Quay Terminal was built on Toronto's waterfront in the late 1920s, it was one of Canada's largest buildings.

The eight-storey building, once called the Terminal Warehouse Building, served as a storage place for goods such as raw sugar, coffee, wood, fish and meats coming in to the bustling port.

But when those uses declined, the building sat dilapidated for years, until in 1983 — with help from a federal Crown corporation — it was transformed into a complex with two levels of retail, a dance theatre, car parking, office space and condos, as part of a revitalization effort of the city's waterfront.

The success of large-scale revamps like Queen's Quay Terminal makes Winnipeg architect Wins Bridgman "suspicious of the knee-jerk reaction" suggesting that the Hudson's Bay Co. building on Portage Avenue cannot be similarly redeveloped.

"The building needs to be thought of in an innovative way," said Bridgman, co-founder of BridgmanCollaborative Architecture.

But treating the Bay building like any other, he said, "doesn't move us forward either as a community or in terms of ways of looking at the building."

Built around the same time as Queen's Quay Terminal, Winnipeg's downtown Hudson's Bay Co. building was the largest reinforced concrete building in the country when it opened on Nov. 18, 1926. It was designed to supply the demands of the growing population of Western Canada.

Fast forward 93 years and the retailer only occupies two of the building's six floors, as large department stores become increasingly out-of-date — especially as people turn more and more to shopping online.

Then, in mid-November, HBC appraised all of its 89 properties. The Portage store was given a market value of $0 by real estate evaluator Cushman & Wakefield — because the costs involved in redevelopment essentially erase its worth in a sale.

Technically, the building is worth even less than that because it has a tax liability of $302,298.

The valuation confirmed suspicions local developers have held for years — but some experts have high hopes for the building's redevelopment, thanks to increasing interest in investing in downtown Winnipeg.

Even so, according to Jino Distasio — the director of the Institute of Urban Studies at the University of Winnipeg — redeveloping the Bay "is going to require somebody with some deep pockets and a pretty neat vision."

Building a fixer-upper

Cushman & Wakefield estimate the building value at $8 million if leased to a single tenant, or $10.8 million if leased to multiple tenants.

Nearly $10 million (adjusted for inflation) worth of renovations were made in 1986 and 1987, but bringing the building up to code in 2019 could cost new owners as much as $111 million, according to the valuation.

The costly redevelopment is "one of the major challenges," says Angela Mathieson, president and CEO of the downtown development organization CentreVenture, because it "really requires that everything be removed from the building and be built from the inside, almost from scratch."

Modern buildings require life-safety systems such as fire suppression, and a certain amount of control over heating, cooling and ventilation systems. Atriums would also likely have to be installed in the Bay to make it attractive to multiple tenants, because it is so massive that natural light cannot shine into the middle of the building, Mathieson said.

"It's sort of the same as with almost any other heritage building that we've seen developed in the last 20 years," she said, citing many redeveloped buildings in the Exchange District that have undergone similar upgrades.

Distasio echoes Mathieson's sentiments, saying the Bay building "is a complicated project," with few local examples of redevelopment projects of similar scale.

He highlighted the Ashdown Warehouse, however, which sits on the corner of Bannatyne Avenue and Rorie Street in the Exchange — and holds historical designation.

The former warehouse was turned into a multi-use complex containing loft apartments, offices, restaurants like Hermanos, and the Aveda Institute.

Historical designation not a negative

A hot debate in Winnipeg earlier this year was whether or not a 110-year-old building on Wellington Crescent should be demolished. The neighbourhood the home is in was eventually nominated as a heritage conservation district, effectively suspending all demolition permits in the area.

Historical buildings are often seen as a negative because redevelopment can be complicated and expensive, and they take up real estate for newer developments, Mathieson said.

But that is a view held by the uninitiated, she says.

"We have seen that if you are skilled at [redeveloping historical buildings], they can be as cost effective as new buildings — and one would argue, in the long term, more valuable because they're incredibly unique."

The Hudson's Bay Co. building received historical designation from the city on March 21. The designation means the building cannot be demolished and compels the owner to maintain the building's character, but also means its owner can apply for grants.

One of the people who advocated heavily for its designation is Heritage Winnipeg president Cindy Tugwell, who believes it's "imperative" that the community preserves its historical buildings.

"[Buildings] are never going to be built like they were at the turn of the 20th century in Winnipeg," Tugwell said. "Because of the materials, labour, and the character-defining elements, we'll never replicate these buildings. They literally are a finite stock."

Distasio added to that, saying historical buildings create a better downtown.

"The more we preserve our beautiful old buildings, the better our community will be for the long-term in [having] a downtown that's vibrant, that reflects its past while looking forward," he said.

"It takes a real visionary person to come up with something that's going to make that building work better than it has for a long time, but recognizing that it is possible."

Distasio highlighted the Red River College campus in the Exchange District as an example.

"The set of buildings that comprise the campus now … had sat vacant for decades," Distasio said. "Somebody had a vision, and that was supported strongly by government, to do something we haven't seen before.

"Had we lost the buildings that now make up Red River College, I think it would be a huge hole."

Footing the bill

Redeveloping the Bay keeps coming down to its size and shape, says Mathieson. 

"We've had great success here in Winnipeg having heritage buildings redeveloped," she said. "But they're all a lot smaller."

Smaller-scale projects involve lower financial risk, she added.

A single developer would not be able to take on the Hudson's Bay Co. building by themselves — there would have to be help from government, Tugwell says.

Different levels of government have teamed up for projects in downtown Winnipeg before.

Portage Place opened on Sept. 17, 1987, through a partnership between the municipal, provincial and federal governments.

The three levels of government came together again last summer to sell the mall to Toronto-based Starlight Investments.

As for the Bay building, the city feels it would be premature to comment on a proposal that hasn't been made, a spokesperson said in a statement to CBC News.

But the spokesperson added that "city officials would be open to discussing any development proposal that includes an adaptive reuse of the building."

If the project attracted funding such as heritage grants, Distasio said he wouldn't be surprised.

Regardless of who pays the bill, landing a strong anchor tenant is crucial, says Mathieson.

On top of the renovation costs, there are costs that come with empty leasable space, she explained. A tenant that can thrive at 450 Portage Ave. would be needed so the building doesn't end up vacant.

Likelihood of redevelopment

Distasio believes redevelopment can happen, but warns that the Bay building is in a tough spot in terms of what is possible in the space.

"It's a hard one for residential because of the [natural] light challenges," he said.

"How much retail could we have in the downtown? We have Portage Place as a retail environment that's kind of struggled. You have City Place as a larger-format retail environment that's struggled."

But based on what he has seen over the years, Distasio is optimistic that the building has a future.

"We've come out of a very significant period of time where the Portage Places and other projects in the downtown were heavily subsidized by government, to now where private sector is building condos on their own," Distasio said.

Thirty years ago, there was almost no interest in developing downtown Winnipeg, he said. But over the last 15 years, "the downtown investment climate has changed quite dramatically" and money is being put toward residential, entertainment and commercial spaces in the area — some of which is coming from investors outside of the city.

True North Square — a project that cost the Winnipeg Jets owner more than half a billion dollars — is an example he highlights.

Since the news broke about the $0 appraisal, developers both in and outside Winnipeg have been calling CentreVenture inquiring about the Hudson's Bay Co. building, and downtown development in general, Mathieson says.

She added, however, that it is too early to gauge the level of interest.