Increased interest in transforming vacant office towers into housing seen in Edmonton, sparking extreme makeovers

Edmonton is joining other cities that are filling old or empty office towers with apartments to revitalize the city centre.

The process has been going on for decades, and at least 30 of those buildings downtown have already been converted from office spaces to housing units.

This month, City Hall’s urban planning committee will hear a report detailing options for a new incentive program that could help developers convert more underused office towers into residential buildings.

At 24.1 per cent in the second quarter of this year, the office vacancy rate in downtown Edmonton was the third highest in Canada, according to the real estate services and investment firm. CBRE Limited. The national office vacancy rate during the same three-month period was 18.1 percent.

“As the vacancy rate has increased and we’ve seen the other shoe drop, suddenly the conversation has become more important,” said Puneeta McBryan, executive director of the Downtown Business Association.

“How do we eliminate some of our surplus offices? How do we breathe new life into these really outdated and irrelevant buildings and increase our residential population?”

In April, Ward Nakota Isga Coun. Andrew Knack suggested the city find ways to encourage developers to consider residential conversions.

Councilors supported Knack’s motion for the administration to recommend ways to increase the number of residential and/or hotel units downtown, using potential measures such as legislative changes or financial incentives.

He and others, including Ward O-day’min Coun. Anne Stevenson, expect an influx of residents.

Like Knack, Stevenson also wants to see what an incentive program for developers and the community would look like. A report is expected to be presented to the council’s urban planning committee at the end of October.

“Downtown is a physical place, but the soul is the people,” Stevenson said. “When the pandemic hit, people left downtown. The heart of our city stopped beating.”

‘The hen or the egg’

According to the DBA, up to 30 former office buildings have already found a new life as residential space.

Most of those conversions in the city are 15 years old or older, including the McLeod and Cambridge buildings and the Liberty building at Jasper and 105th Street.

Anuj Gupta, president of Anu Developments, is working on converting an office tower in Oliver, a location he believes has a better chance of success than other downtown Edmonton neighborhoods.

It’s a gamble that Gupta says comes down to density math.

While a 100,000-square-foot tower could house about 300 people in apartments, that same building used as an office tower would house 1,000 workers. Those 700 additional bodies, she said, buy lunch and coffee, or go to dinner after work. So which can bring more life and money to the city center?

“It’s the chicken or the egg, right? You build things where people can live and then everything else follows?” said Gupta.

“That difference in bodies and people using services is what will really keep the city center vibrant.”

Many developers look to the south for inspiration. Calgary has approved 10 conversion projects under its downtown development incentive program, which provides financing based on a square footage formula up to a maximum of $15 million per property.

But for Gupta that might not be enough. He says before building in downtown Edmonton, city council would need a strategy to keep businesses and their employees downtown.

“It’s not a question of people being downtown, it’s a bigger issue of not having those employers.” [that Calgary does] that can make every business that is running successful,” said Gupta.

From desk space to new installations

Conversions can be expensive. Unlike condominiums or apartment buildings designed with compartmentalized units, developers have to convert office space into separate living quarters with their own plumbing, gas and heating. There may be many challenges or surprises.

For example, the large glass windows common in office spaces can create challenges with temperature regulation. Developers should consider replacing siding or investing in new thermostats.

“The reason [conversion is] not ramping up as quickly as we would like is because of all those hidden barriers,” said Moe Barzager, managing partner at Edmonton-based Hibco Construction.

Hibco carries out renovation work on residential and commercial buildings and has invested in its own conversion project in the city.

Some skyscraper conversions start off on a better footing, such as the Enbridge Tower at Jasper Avenue and 102nd Street. The building was initially going to be a Hyatt hotel, but a pandemic twist converted the development to apartments, with the main floor reserved for commercial tenants.

That development, now called Peak Tower, will add more than 270 affordable units to the downtown. Its website says the building is scheduled to open in late 2023.

“As people get more accustomed to these conversions, it will become more common,” Barzager said. But not all skyscrapers will be suitable for conversion, she said.

‘Nothing but opportunity’

Office conversions may not be the only answer, but they could well be part of the solution to downtown Edmonton’s problems.

It’s something McBryan and the DBA hope for, although it seems unclear whether residential growth will spur new businesses to come downtown, or whether enough businesses will encourage new residents.

Whatever it takes, McBryan said the key is to get people back to the core.

“Honestly, we just need thousands more people living downtown to reach the level of density we need to make up for the office workers we’ve lost,” he said.

“To me it’s nothing more than an opportunity. All the factors are there, we just need to regain economic confidence. We need construction costs to come down a little bit and we certainly need the city to continue investing in the city center.”