A San Francisco-based investment company is investing more than $10 million in the redevelopment of a Calgary office complex to make it more attractive to tenants.
Spear Street Capital, which bought the three-building, former IBM Campus comprising about 370,000 square feet, believes the street-front development fits in with the trendy and busy Beltline district adjacent to the downtown core.
Adam Ballew, senior vice-president of Spear Street Capital, told RENX The District project was acquired in August 2018 from Dream for $98 million.
The office space is currently about 70 per cent leased.
“When we looked at this, it really fits what we do as a company,” Ballew said.
“We try to take real estate and change it and shape it for office tenants so that it can be an extension of their brand, whether that’s where their brand already is, or helping them to advance that brand because we know that real estate is most valuable to companies not when it’s just somewhere to show up to work, but when it helps people with recruiting and retaining talent.
“That is our sole focus . . . to create real estate that helps enhance the brand of the companies there.
“When we looked at this project, you have three very high-quality buildings that are in a very dynamic and exciting neighbourhood. Bu,t the three buildings are as boring, and suburban and sterile as they could possibly be.
“The thought was, ‘How can we change the interaction on the ground floor to have them better reflect the community around it and to entice more office users to come to the project and enhance their experience once they’re there?’ ”
Spear Street’s plan for The District
Ballew said the ground-floor areas at purchase contained 4,100 square feet of vacant retail space.
That will be expanded to 25,500 square feet to include 18,200 square feet of new retail space converted from office, and 3,200 square feet of newly constructed retail.
Spear Street intends to house six operators in a food hall and include six other retail/restaurant spaces.
“We’re building what we’re calling a Market Shed in the centre of the courtyard that will be a climate-controlled, 365 days a year, suitable building, with a ton of glass on the exterior so it will feel like you’re outside as much as possible while still working with Calgary’s weather – for all the different weathers you get over the course of the day,” Ballew explained.
“The thought is to find a brewery-type operator to go into the southern half of that – somebody who could do brewery and food and have that really be a centre point of the development and then to have a tenant lounge on the northern half of that and then we have several standalone restaurant spaces.
“And we’re also looking to create a food hall in the ground floor of what’s called Building A, the westernmost building.”
Enclosed cobblestone laneway
In between the buildings, Spear Street will construct a glass enclosure around an existing laneway, sheltering it from the elements and linking the two buildings.
“A part of the project I’m really excited about is between that westernmost building and the Market Shed there’s an alleyway that gets created by the gap between the two and that will be glass-covered and will be enclosed on each side,” he said. “It won’t be fully temperature-controlled, but will have heat lamps for the winter.
“That will be a great transition between the two spaces and there will also be seating out there and that’s going to have a cobblestone walkway. So it’s going to really feel like a different space that connects the two.”
There will also be an open courtyard with stadium seating and a small open plaza which could accommodate small concerts and performances.
“The goal is that this can truly become a focal point for the Beltline neighbourhood,” said Ballew.
Ballew said the company, which also has an office in New York, invests in the U.S., Canada and the U.K. and Ireland.
Spear Street in Canada
Spear Street’s first Canadian acquisition was in 2014 when it bought all of Blackberry’s real estate in Southern Ontario – about three million square feet of space.
The technology company leased back about a third of that space.
“We’ve since acquired properties in suburban Vancouver, this project in Calgary, and in Montreal as well. . . . Certainly trying to get a wide breadth across Canada as we go,” said Ballew.
“We had been spending considerable time in Canadian markets prior to our acquisition of the Blackberry portfolio in 2014.
“We have since expanded our portfolio to stretch from Vancouver to Montreal. Canada continues to be a focus for us as a result of its dynamic cities that continue to foster growth and attract world-class talent.”
John Moss, CBRE‘s senior vice-president, retail leasing and investment in Calgary, is in charge of leasing the retail space in The District. He said the project is ideally located at 1st Street S.W. and 11th Avenue.
“One of the challenges I’ve had with 1st Street is that it’s fragmented. It hasn’t had a critical mass to really consolidate it. I think The District now gives it the central hub that it needs, that people should be able to identify with,” Moss told RENX.
“This will be a central gathering spot, a central sense of community, over and above being an amenity for the building. It just brings it more as a destination and a hub.
“It’s local. We’re not looking for any national or international players. It’s all local-based businesses. So the food hall, we’ve focused primarily on food trucks, on guys who have incubated in the food truck market and now want a permanent spot.
“We’ve targeted food trucks specifically to bring them a brick-and-mortar permanent home.”