Calgary-based Enright Capital Ltd. has purchased 635 8th Avenue SW from Cadillac Fairview, a subsidiary of the Ontario Teachers' Pension Plan.
Enright Capital president Patrick McFetridge announced the deal on LinkedIn on October 24. A sale price was not disclosed, but a figure of $16.9 million has been reported in other media.
Plans for the Class B property include “a new gym, conference centre and tenant lounge,” McFetridge said in making the announcement.
B and C class properties have been a drag on the Calgary office market, prompting the city to launch the Downtown Calgary Development Incentive Program to address overall vacancies that CBRE Ltd. pegged at just under 30 per cent downtown in the third quarter.
Refurbishing or converting them to other uses – or in some cases, demolishing them – have been key to the city’s management strategy. In September, Calgary gave a fresh infusion of cash to the development incentive program to keep the activity going.
However, other headwinds have been a drag on investors.
Cadillac Fairview’s plans to sell two of its six office assets in Calgary as part of a regular portfolio rebalancing hit the news in February, but the transactions didn’t take place immediately.
Susan Thompson, associate director of research with Colliers Canada in Vancouver, cited the issue of price discovery as a factor.
“There’s the ‘can we find a buyer for these,’ and everyone’s trying to weigh what income is in place, what’s the price per square foot,” Thompson said. “Because there hasn’t been a lot of activity in the market, it’s very hard to benchmark what those prices should be.”
Encor Place traded May 2 for $21.5 million to Calgary property manager UnitiiPM Inc. but the delay on the second transaction was regarded as a sign that buyers weren’t fully ready to jump in despite greater volumes of activity.
CBRE flagged Germany’s Deka Immobilien Investment GmbH purchase of 401 West Georgia Street and 402 Dunsmuir Street for approximately $300 million in May as the signal investors needed. However, many remained cautious.
“It’s a bit of a wait-and-see game to when this really does start to unlock activity,” Thompson said after the Bank of Canada began cutting rates in June. “Some are going to be more willing to move now, and some are going to want to see rates come down further.”
With four rate cuts having shaved 125 basis points off rates, the action is starting.
Enright’s deal is a signal of the growing greater confidence in office transactions as cheaper financing and greater economic certainty point to a normalizing of market conditions.
Enright did not immediately respond to a request for comment.
