We can’t make this stuff up.
In 2014, the City of Edmonton approved a plan to build a new transit garage on the corner of Yellowhead Trail and Fort Road. According to the City, the new garage would handle the similar capacity as the existing transit garage located at 11840-106a Street.
When presenting the business case to replace the older facility, the City reported that “a new facility with the same bus capabilities would cost approximately $128 million”. As the project progressed, the City estimated the cost would spike to $181.6M. That budget then jumped to $186M, then $196M, then $200.4M, then $210.5M.
This warehouse, which has increased in price over $80M since it was first presented as an option, is also home to the largest municipally-funded art project in the city.
It’s not difficult to see how these funds are being spent. For example, included in the budget is $4.56M for “contemporary workplace enhancements“, which is predominantly used towards a dedicated day care within the building. The design of the building itself also won the architect and prime consultants an Award of Excellence by Canadian Architect. They described this building as follows:
“The modern design will feature interior spaces covered in natural light controlled by light diffusing glazed panels. When employees enter the building – primarily from underground parking – they will be greeted by light wells and enter through a sky lit concourse.”
This award-winning building with $1M of exterior art is replacing an old industrial building, the same building the City of Edmonton just sold to NAIT for $3M. The Network reports there was an appraisal at $10.7M, but the price reflected consideration for building demolition, hazmat removal and remediation of hydrocarbon contamination.
The old building is 283,039 SF on 11.89 acres, which means the sale price was $10 / sq ft, or if it’s believed there was zero economic value remaining in the building, the price reflects roughly $250,000 / acre.
There aren’t any industrial land parcels currently available for sale in the immediate area, but there is a 2.42 acre site available on 136 avenue and 142 street for $1.1M / acre. The City of Edmonton is marketing another parcel of land on 141 street and 162 avenue for $761,000 / acre.
So with that all in mind, here are some thoughts & observations we have on this project:
– Government spending on real estate truly defies conventional thinking. In what universe would a private company move from a $3M building to a $210M building?
– The cost of the daycare in the new building cost more than the previous building just sold for;
– A warehouse for buses was designed to such a high standard that it won an architectural award;
– The most expensive art project ever commissioned by the City of Edmonton sits atop a warehouse in Northeast Edmonton;
– With the City of Edmonton already offering a number of perks and benefits to their employees, do they really need to offer underground parking and on-site day care services to attract and retain employees? How does the private sector – which has to compete for these same jobs – stand in comparison?
– The argument that this development is helping spur activity in the area is unconvincing. For example, Station Pointe (a 112 unit “urban village” down the road) was just put under court-appointed trusteeship.
We’re critical about City Council spending specifically because of examples like this. How much further can the City of Edmonton continue increasing property taxes before people have had enough?
“Drove my Chevy to the levee but the levee was dry”.
– Don McLean
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Chad GriffithsPartner, SIOR, CCIM
Chad is a partner with NAI Commercial Real Estate and focuses on the Greater Edmonton area. Chad entered the industry in 2004 and has completed over 400 commercial transactions with clients ranging from small, local companies to large institutional owners. Chad has been a top 15 producer with NAI Canada-wide since 2013.
Ryan BrownPartner, BCom, SIOR
Ryan is a partner with NAI Commercial Real Estate in Edmonton and is currently ranked nationally as one of NAI's top advisors. Having executed in excess of $100 Million worth of sales transactions and over 2 Million square feet of lease transactions, Ryan has developed a firm understanding of asset evaluation and an aptitude for building design, functionality, and long-term practicality.
Darcie is a licensed Commercial Real Estate Agent in the Province of Alberta with a focus on the Edmonton market and its surrounding areas. Darcie accomplishes custom solutions for her clients through her personable nature and results driven attitude. Darcie can help if you are looking to invest in commercial real estate or are looking for representation for a sale or lease transactions.
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