Tower built on confidence to rise in core
Eighth Avenue Place proceeds entirely on spec
Mario Toneguzzi
Calgary Herald
Saturday, February 23, 2008
Despite a slowdown in Calgary's economy and increasing downtown office vacancy rates, construction has begun on a 49-storey tower that will add more than one million square feet in the core by early 2011.
The Eighth Avenue Place development, formerly Penny Lane, is proceeding entirely on speculation with no pre-leasing, the Herald has learned.
A decision on when to proceed with a second tower planned for that site will depend on how leasing goes for the first tower and future market demand. The second tower is a 39-storey, 800,000-square-foot development. The entire project, including the two towers, is an estimated billion-dollar development located in the block at 8th and 9th avenues S.W. between 4th and 5th streets.
Excavation and shoring is underway at the site for the East Tower -- phase one of the project.
"Historically, Calgary has always had the strongest office space demand for the better quality product and the calibre of this building is going to be above anything we've seen in Calgary. In fact, it would probably be ranked as one of the top quality buildings in Canada once completed," said Randy Fennessey, president of Colliers International in Calgary, who, with Jim Rea, the company's senior vice-president and partner, is the exclusive leasing agents for the project.
Because of the large number of head offices in Calgary in the energy sector, there will continue to be strong demand for premier downtown office space, he said.
"We think we're in a good time band of completion relative to other new product coming into the marketplace and we feel very confident that Calgary and the Alberta economy is going to support ongoing growth and office space demand," said Fennessey.
A downtown office market report by Colliers said the vacancy rate at the end of 2007 was 3.2 per cent, up from 0.3 per cent at the end of 2006. This increase in vacancy was primarily due to the 1.3 million square feet of new office development completed in 2007. The downtown office market has an inventory of about 34 million square feet.
"(Eighth Avenue Place) is a very interesting development and we think it's a very good one," said Bruce Irvine, vice-president for business development and retention at Calgary Economic Development.
"We still have 50 per cent of the downtown square feet that's under construction right now in major Canadian centres occurring right in Calgary," he said.
"We've always had about three million square feet or more in the pipeline ready to go," Irvine said.
Irvine said with projects such as EnCana's The Bow and Eighth Avenue Place, Calgary is coming of age in terms of the quality space.
The Eighth Avenue Place project is owned by SITQ, a subsidiary of Caisse de depot et placement du Quebec, AIMCo (Alberta Investment Management Corp.) and Matco Investments Ltd. Gibbs Gage Architects designed the development. The development team also includes Hines as development manager, EllisDon as the contractor, and architectural firms Pickard Chilton and Kendall Heaton Architects.
The building will also incorporate best practices in environmental design, targeting a LEED Gold certification.
"It's a triple A (class) building," said Rea, adding that access to retail, parking and transit is a draw.
The project is also in the heart of Calgary's financial core.
The west tower is phase two of the development and a decision to build that structure will be based on the success of the first tower and demand in future market conditions, said John Smith, vice-president of 20 Vic Management Inc., which is acting as the owners' representative on the development.
mtoneguzzi@theherald.canwest.com
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EIGHTH AVENUE PLACE
- Located at the former Penny Lane block at 8th and 9th avenues S.W. between 4th and 5th streets;
- Construction started on Phase I -- a 49-storey, one-million-square-foot office tower (East Tower);
- Includes a 55,000-square-foot retail podium, an indoor winter garden, an outdoor park and plaza, and an underground parking garage with 1,143 stalls;
- Ownership group consists of AIMCo, SITQ, and Matco Investments;
- Tower is scheduled for completion in early 2011;
- A future 39-storey, 800,000-square-foot office building (West Tower) is also part of the planned development, but a decision on proceeding with it will depend on market demand.
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