While Calgary’s downtown office market continues to experience severe challenges, local real estate company Aspen Properties has invested millions of dollars in renovations to one of its jewel properties in an effort to attract tenants.
The Calgary-based company bought the 1.1-million-square-foot Sun Life Plaza complex, comprising three 28-storey towers in the heart of the city, in December 2018 for $225 million.
Aspen immediately set out on a plan to redevelop it into a “shining example of the amenity-rich and positive office environments in such high demand by today’s workforce.”
The refurbishments cost about $25 million, pushing its total investment in the property so far to $250 million.
The complex includes 648 underground parking stalls, a conference centre, a fitness centre, a tenant lounge, bike storage, a completely redeveloped lobby and a new food hall. It is connected to the downtown’s vast Plus 15 indoor pedestrian network.
Sun Life Plaza project similar to The Edison
Rob Blackwell, Aspen’s chief operating officer, told RENX the redevelopment of Sun Life Plaza comes on the heels of the success of a similar downtown project at The Edison office tower, which Aspen completely redeveloped a few years ago.
“We were looking for a bigger opportunity, as in footprint, to take our approach to office space, which is amenity-driven – kind of lifestyle or experience of a tenant – to a whole other level. And that was really the purpose of finding an asset of this size, being 1.1 million square feet,” said Blackwell.
“It was the opportunity to do gathering space as well as the amenities – like nothing else in this city, province, country almost.”
President and CEO Greg Guatto said what Aspen liked about this particular asset was that the atrium was a unique space.
“I don’t know of any other large big atrium of about 55,000 square feet that presented an incredible opportunity in our minds to do something substantial, where you could have a ton of not just amenities but collaborating space, meeting space, active space, events,” said Guatto. “All those kinds of things that tenants today are looking for. That was a pretty unique opportunity.
“We also liked the location. The east end of town. Larger assets.”
The complex redevelopment included 57,000 square feet of amenities, with 41,000 square feet that is tenant exclusive.
Sun Life Plaza to be rebranded
The Sun Life Plaza complex, which will be rebranded and renamed in the coming weeks, is about 75 per cent occupied in a downtown commercial real estate market that is looking at a vacancy rate overall of about 30 per cent. Main tenants include three energy-related firms, Keyera, Sinopec and Sproule consulting.
“Our marketing for The Edison (30 storeys and 446,300 square feet) . . . when we first started The Edison, we thought it was about tech tenants specifically,” Blackwell said. “But, we learned through that process that pretty much every user today is in tech in some way for starters, and they’re all looking for an improved culture and an improved workplace to grow their culture.
“So what we originally thought maybe three or four years ago was tech companies, it’s really companies that are looking to evolve their company culture and utilizing their space and viewing an office as a hiring practise as opposed to just a liability.”
Guatto said Aspen is prepared to reinvest in a significant way to redevelop its properties.
“Even despite a down market, we think we’re going to be able to attract a lot of tenants,” he said.
The Edison, for example, has occupancy of between 80 and 85 per cent. The building was entirely vacant when the redevelopment began, so it was leased from zero occupancy in a challenging market.
Aspen to continue property investments
Aspen currently has about $1.2 billion in assets with 14 downtown office buildings – 11 in Calgary and three in Edmonton – representing about 3.8 million square feet.
Guatto said the company has done exterior work on its Palliser One office tower and it is about to redo the plaza at the front of the building. A skating rink has been put on the property and a tenant lounge has been built.
“We’re in the midst of doing a repositioning and complete upgrade of Palliser One which is connected to The Edison, if you will, across the street through the Calgary Tower project,” he said.
The complex also includes Palliser South, Tower Centre and the Calgary Tower itself.
“We’ve been really looking at all of our assets to reposition them and to do these kinds of things that are going to help companies attract and retain talent. Edmonton is also next. . . . All in the Arena District in downtown Edmonton. Those assets we’re investing in.”
Guatto said the company has expanded its offerings by creating the Aspen Club. Any tenant in the Aspen portfolio can use an amenity in any of the buildings with complete access through a new tenant app.
Seeking more “high-growth tenants”
Blackwell said the company is entrepreneurial and it believes it will attract more tenants than its peers through the differentiation of its products.
“It’s still challenging, but we’re searching and attracting all of the high-growth tenants right now, which is where we see our growth, through our tenants that we attract and retain already,” he said.
“It’s still a challenging time and we’re competing with everyone else to get the best and the fastest-growing companies.”
In Calgary, Aspen has about three million square feet of office space with a vacancy rate of about 25 per cent – just under the overall downtown office vacancy rate.
“We’re a little better than market and we see getting a lot more activity. We’ve been busy through this crazy time because, a) different product, and b) companies want to be back,” Guatto said.
“All of the tenants we talk to say, ‘We want to come back, we want all of our people back together, we want to collaborate, we see the importance of having an office, we see the importance of attracting talent.’
“That’s given us the confidence to continue to invest and reposition assets and look for new ones in this challenging time.”