Calgary’s downtown strategy director said Wednesday’s announcement of the first three recipients of office conversion funding is very gratifying.
“It’s the first recognition in a long time that we have a path forward,” said Thom Mahler.
The announcement marks a big step in Calgary’s downtown revitalization strategy.
The initial projects will receive $31 million of the $100 million topped up by Calgary city council last year. The three projects will remove 414,000 square feet of office space from the market and will converted into roughly 401 homes.
The estimated grant amounts are based on $75 per square foot of office space being coverted to living space. The final amount will be determined and disbursed when the project is completed.
Three projects were named, including two within a block of one another.
- Palliser One (125 – 9 Avenue SE) Aspen Properties
- HAT @ Arts Commons (205 – 9 Avenue SE) Cidex Group of Companies
- 909 – 5 Avenue SW – Peoplefirst Developments
Mahler said the exciting aspect is the partnership with the private sector.
“This is a totally different kind of real estate development. Repurposing existing buildings for different uses is not something Calgary has had in its history,” said Mahler.
“Our building stock is all getting to the age now where it can be re-evaluated for its second life. So that’s where the excitement is.”
Mayor Jyoti Gondek said the city needs to remove 6 million square feet of office space over the next decade. That would help to stabilize property values.
“Today is part of the first steps on that road towards this important goal,” she said.
Palliser One project
This project, put together by Aspen Properties, will convert roughly 200,000 square feet of space to 176 one- and two-bedroom apartments. It will have a modern common floor with a games area, work area and a rooftop patio.
It will also come with twice the number of elevators as a typical apartment building.
“We are confident that this project and others like it will greatly enhance vibrancy in our downtown and the overall brand of our city as we work together to retain and attract the best talent and businesses,” said Rob Blackwell, Chief Operating Officer for Aspen.
The top half of the building will be converted, Blackwell said of the $60 million project.
“We will create an amenity space on the 17th floor that will feature 25-foot ceilings, becoming not only one of the coolest amenities in our city but a symbol for downtown’s revitalization,” Blackwell said.
HAT @ Arts Commons
This project, by Cidex Group of Companies, will convert 110,000 square feet of office space into a mixed-use tower with 113 new units.
Sarah Itani, business development manager with Cidex, said they were thrilled by the opportunity to work on this project on a unique and valuable corner in Calgary’s downtown.
Itani said they envision a complete main and lower floor will be community and amenity-based spaces. No commercial or office space, she said. Given the proximity to Arts Commons and being in a vibrant arts corridor, she said they saw workshops, galleries and places for interaction.
“It’s a community that we’re aiming to develop here. And so we’re really looking forward to bringing this pocket of fresh air of revitalization to the downtown core,” Itani said.
“As a native Calgarian, I cannot tell you how excited I am about this project having watched our downtown suffer as a result of the economic recession further worsened by the pandemic.
“There’s just so many amazing pockets of our core that really need new life to them.”
909 – 5 Avenue SW
Roughly 104,000 square feet of space will be converted into approximately 112 pet-friendly apartments in this Peoplefirst Developments project.
The main floor will have retail and amenities, while the second floor will have co-work opportunities for small business.
The conversion will have studio suites up to three-bedroom.
Maxim Olshevsky, managing director of Peoplefirst, said he recalled back in 2018 a brochure crossing his desk of an empty office tower.
“It took me three seconds to fall in love with the idea of what it could be,” he said.
“Then it took me two months to realize, no matter how much perseverance I have, it’s cost prohibitive.”
He said three years later, help arrived. The city’s downtown office conversion program.
“Their vision and support remove the biggest obstacle that individuals like myself and developers and property owners face when they would undertake such projects,” he said.
One of the elements of the Peoplefirst property is its commitment to housing affordability. Olshevsky said 40 per cent of the 112 units will be made available at 20 per cent below market value rents. They’re also going to include accessible units and discounted units to city social agencies for transitional housing.
The challenge of conversion
Olshevsky said there are two major construction roadblocks in the conversion process: Exterior envelope and mechanical components.
For the exterior, he said you need to account for energy modeling and ensure there’s a proper thermal barrier for recessed patios.
There are heating and cooling aspects that just aren’t the same for residential use. Further, you need holes for each new unit for plumbing and other mechanical access.
“We are estimating to have 2,400 penetrations in the floor, and you have to coordinate that,” he said.
“You have to make sure that everything lines up. Because, of course, there’s the beams, there are other structural components that you are not supposed to be touching.”
Itani said one of the other challenges in office conversion is the efficiency of the floor plate. Essentially, how much of it can be livable space? You can only collect rent on that livable space, she said. So, if a building can’t meet an 85 per cent floor efficiency rating the economics just don’t work.
While Itani said not all of Calgary’s office space can or should be converted, there’s enough of a stock available on the market.
Next steps for the city
Mahler said that the city received 11 applications for the Downtown Calgary Development Incentive Program.
Two other projects are in the final stages of approval. More projects will work their way through the pipeline and future announcements are expected.
The timelines for each project are different, too.
Ward 7 Coun. Terry Wong, who represents the area, said moving ahead on the office conversions is extremely important. He said it’s a long road to recovery for the downtown.
It comes down to announcements like these, but future ones about making the area a destination.
“The answer is we need to take care of the downtown just as much as we take care of our established areas or suburban communities,” he said.
“This is important for downtown, but so is everything else, as long as we look at it as a destination strategy to live, work and play.”