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Globe & Mail: North Downtown Victoria Draws Interest


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#1 Holden West

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Posted 05 September 2006 - 05:54 AM

PROPERTY REPORT

Gritty neighbourhood draws interest


Demand in Victoria for commercial rental space targets old office buildings

POSTED ON 05/09/06
PETER MITHAM
Special to The Globe and Mail

The departure of the Bay department store from its landmark Douglas Street building in the increasingly gritty north end of downtown Victoria in May, 2003, brought dark days to retailers along the once-fashionable shopping strip.

Street-front retail vacancies surged to 7.8 per cent and social ills increased. The failure of Vancouver-based RG Properties Ltd. to close on a deal for the 243,000-square-foot Bay building, touted as a possible home for the Greater Victoria Public Library, added to the area's uncertainty.
"There has been a decided drop in occupancy levels and rental rates in that northern corridor as a result of the Bay closing. It was a long time coming, and the Bay was the final nail in the coffin," said Andrew Turner, managing director of Colliers International in Victoria.

Now, Townline Group of Richmond, B.C., is pitching a $220-million plan to redevelop the property, to be called the Hudson, with a mix of residential and commercial space that promises to revive the area's flagging prospects. Townline acquired the property from Hudson's Bay Co. in 2004 after RG Properties let its option on the site lapse.

Redevelopment plans call for 145 loft-style homes in the original building, which was built at a cost of $1.5-million in 1921. The ground floor will have 45,000 square feet of retail space. A carriage-way with small-scale retail units will separate the original department store from three residential towers with approximately 400 units and 120,000 square feet of commercial and institutional space.

Townline president Rick Ilich, who has done several heritage restorations in Vancouver, says the development will improve the district.
"This part of Victoria has really been in a certain level of decay ever since the original Hudson's Bay moved out of this location," he said, adding that a recent cleanup of the department store's parkade retrieved 1,500 needles that had accumulated over six months.

"It's not a part of Victoria that people feel comfortable going to," Mr. Ilich said. "The retail and the office space is very, very hard to keep full."
Mr. Ilich believes the area can be developed into a mixed-use precinct offering people opportunities to live and work. Given the shortage of available office space in downtown Victoria, new space coming on stream in the Bay redevelopment and that of the Well, planned for an adjacent block to the north, will give the area fresh momentum.

For the Well, Victoria developer Principle Holdings Inc. plans two buildings, including 132,000 square feet of class A office space, a 30,000-square-foot medical centre leased to traditional and non-traditional practitioners, 80,000 square feet with various commercial uses and 84 residential units. The $120-million project could break ground early next year. The first phase would likely be ready 14 months later.

The commercial component is much needed, said Peter Laughlin, principal of Wessex Project Management Inc., which is managing the project for Principle. "Victoria has been going through a fairly significant residential building boom. And a large part of the residential construction is actually taking place in old offices."

The only other major office development Victoria has seen in the past decade is Upper Harbour Place. Griffiths Milne Clough Projects Inc. of Vancouver launched the 150,000-square-foot project in 2003. Just 10,000 square feet remains available to lease, however.

Throughout Victoria, Colliers International reports that office vacancies are running at 4.9 per cent and class A space is particularly tight, with vacancies sitting at 1.8 per cent.

With annual absorption running at 100,000 square feet and private companies flocking to Victoria to be close to a business-friendly provincial government, having more downtown space is critical, Mr. Turner said.
"It's bad for the continued growth of our economy in Victoria not to have an adequate supply to satisfy the growing needs of the tenants," he said. "The outsourcing of government contracts and the need to be in Victoria for those private sector companies created quite a demand."

Mr. Laughlin said the Well has attracted the interest of Alberta companies active in the resource sector that want to locate in Victoria. Businesses in the financial and high-tech sectors are also among the potential tenants.
Although the Well may help address the shortage of downtown office space, Ken Kelly, general manager of the Downtown Victoria Business Improvement Association, said a long-term vision that complements residential development will support the resurgence of the north end of downtown.

"People are recognizing there needs to be more," said Mr. Kelly, whose association represents 2,000 property and business owners in the downtown area.

Additional office space development faces significant hurdles, however, including high construction costs and height limits on new construction. These factors could prevent the long-awaited redevelopment of the former Bay site.

Victoria's existing downtown area plan, currently under review, limits buildings to heights of just 140 feet, or about 14 storeys. Developers such as Mr. Ilich, who wants to build to a height of 25 storeys, argue that the restriction effectively prevents the kind of densification needed to make complex mixed-use projects work.

To create the pedestrian-friendly environment that consultations have indicated people want, Townline plans to reduce site coverage to 78 per cent from 100 per cent. But to get the full benefit of the density allowed as well as to make the project financially viable, less site coverage means a taller building.

Mr. Ilich said the company is ready to begin construction as early as next summer with completion slated for 2009. But he expects opposition to Townline's height plans. A meeting between Townline officials and city staff in early August failed to resolve the matter, which is set to go before city council's whole committee on Oct. 5.

"There's definitely still the big red flag about height," he said.
"It's going to be very clear that, due to political pressures, there'll likely be a recommendation to not break the height envelope, which would be an absolute disaster."

Deb Day, director of planning and development for Victoria, acknowledged that Townline's proposal will undoubtedly provoke discussion but that it would ultimately reflect how the community and City staff see the downtown changing and evolving. Knowledge gained through preparations for a new downtown plan will feed into the assessment.

"They're going to be vetted not only against the 1990 plan, but what we've been hearing from the community through our process," she said, adding: "The [building shape] questions are ones I think we're going to have to take more time on."
"Beaver, ahoy!""The bridge is like a magnet, attracting both pedestrians and over 30,000 vehicles daily who enjoy the views of Victoria's harbour. The skyline may change, but "Big Blue" as some call it, will always be there."
-City of Victoria website, 2009

#2 Scaper

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Posted 05 September 2006 - 12:32 PM

Awesome letter / article. Very interesting.

#3 aastra

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Posted 15 September 2006 - 07:14 PM

"There's definitely still the big red flag about height," he said.
"It's going to be very clear that, due to political pressures, there'll likely be a recommendation to not break the height envelope, which would be an absolute disaster."


Well said. This project needs height or it just won't work. How much height is too much? Good renderings that show the proposed buildings from various vantage points should make this perfectly clear.

Anybody who thinks this project can go forward at 12-stories or less is out to lunch. It's not 1986, it's 2006. The anti-height crowd needs to choose their battles more carefully. This Bay project is the perfect situation for them to relax their strict stance. It's a long way from the tourist zones, and the only heritage building in the vicinity is the Bay itself (which desperately needs a pick-me-up). It's a win-win situation for everybody.

In 2016 I hope to take a walk on the bustling sidewalks of a rejuvenated north downtown full of attractive mixed-used midrise buildings, with a sprinkling of high quality highrise buildings here and there. Will it happen? We'll see...

#4 Mike K.

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Posted 16 September 2006 - 03:44 PM

In 2016 our politicians and the fear-mongering crowd claims Victorian's will thank them for maintaining Victoria's "unique small-town character and ambiance."

Um. What exactly is Victoria's unique small-town character and ambiance. And which part of Victoria actually fits that description? The 300-block of Simcoe, maybe?

Know it all.
Citified.ca is Victoria's most comprehensive research resource for new-build homes and commercial spaces.


#5 Scaper

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Posted 16 September 2006 - 03:58 PM

This is what they said thirty years ago when all this B.S. started. Well now I am in my thirties and I am not thanking them for doing this.

In fact the only ones that seem to think of this favourably are the people who won't be here in thirty more years. So I think they are trying to maintain the Victoria they saw back in the 50's.

I think this same crowd is too old to take the time to travel up to Bearmountian and see the real disaster taking place. Yet we have a mayor and council that still think that the majority of the people feel this way. The fact that the Mayor voted no for the Clock tower proposal because the six story building was too dense for downtown makes me feel sick. Yet It seem to be O.K. that a 23 story tower on Bear Mountian or a 12 story tower on Traingle Mountian etc...is ok.

Because really our children now in thirty years will thanks us!!! Just like this child thirty years ago is thanking them now.....Just disgusting!

 



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