The Phipps-McKinnon Building gets new owners and is slated for partial redevelopment
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Downtown Edmonton’s Phipps-McKinnon Building is earmarked to be redeveloped into a split-use building of offices and residential after it was bought last month by Josan Properties.
Located on Rice Howard Way in the heart of Downtown Edmonton, the Phipps-McKinnon Building was built in the 1970s. The tan-toned building was operating with a 60 per cent vacancy rate, save for the office space rented out near the top of its 19 floors.
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The building’s lobby received some love with an artful redesign that reinvigorated the space. A lively coffee shop and bustling restaurant have kept the hollowed halls of the main floor in the zeitgeist of the city. The love of the lobby didn’t extend up past the main floor, but Raka Josan, president and CEO of Josan Properties, said that’s about to change.
“I really believe in what’s happening in this city. A lot of good things are happening. The arena district really kind of revitalized Downtown, and we want to just continue that,” said Josan.
With its development permit already secured, Josan Properties will be pumping $22 million into the project. Floors four to 10 in the redevelopment will be converted to more than 90 residential units, comprised of one- and two-bedroom apartments. Floors 11 to 19 will remain office spaces, and the building will be getting an amenity floor on the third floor open to office and residential tenants. The amenity floor is expected to have a fitness room, yoga centre, outdoor patio, and more.
Office-to-residential redevelopment has been a hot topic for real estate across North America, with Edmonton no exception. Calgary attracted attention for the city’s grant program that launched last year to work with developers to help offset some of the costs associated with office-to-residential redevelopment.
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Calgary’s program was hugely popular among developers, shelling out more than $100 million from the city that leveraged more than $500 million from developers, and has contributed to 17 redevelopment projects. When Josan Properties started looking at the Phipps-McKinnon Building roughly a year ago, there were still rumours that a similar grant program might be in the works for Edmonton.
The $11.25 million sale, which included the Phipps-McKinnon Building and two neighbouring buildings that are home to Sherlock Holmes and Sorrentino’s, came together on March 19 after nearly one year’s work. As the deal was worked on throughout the year, Josan’s plans had always been to redevelop the space to residential. When the City of Edmonton declined a plea from developers for financial incentives for office-to-residential redevelopments, Josan’s plans didn’t change.
Josan said the company didn’t set out to lead the charge towards office-to-residential redevelopment, but believes in taking the risk. From the moment they started considering the purchase, conversion was on the table.
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“We’re taking a risk. There’s definitely no doubt there. We’re very confident that it’s a calculated risk, and we’re confident that we’ll succeed,” he said.
Josan is backing the project by moving its own offices to the building from Edmonton’s southside.
“If we had any concerns about Downtown Edmonton coming back, we wouldn’t be doing that. Any concerns about safety and security? We wouldn’t be doing that. There are still challenges there, of course, but I think we’re definitely moving in the right direction.”
Commenting on the decision to pursue split redevelopment rather than full, Cory Wosnack, Avison Young’s managing director in Edmonton, said he feels the move would help the businesses in the area.
“Hospitality requires a balance,” said Wosnack.
The Sorrentino’s and Sherlock Holmes in the accompanying buildings in the sale are expected to stay where they, according to Josan. With increased traffic from the building and potential entertainment district in the works, the restaurants in the area could even see a rise in business.
As a split-use building, Josan and Wosnack said the building will rarely be dull. Where some buildings might have office space that vacates in the evenings, or conversely full residential buildings that are vacant through the day, the split use maintains a steady flow of traffic at all times.
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With the development permit already secured, Josan said that barring any complications in getting a building permit, they expect work to begin in late May or early June. Josan said the project’s timeline is currently predicted to be roughly 12 months, meaning the building could see its first residential tenants in a year’s time. The amenity floor is expected to be completed in six months, which will be opened to the office tenants in the building.
Wosnack praised the city’s speed in getting the development permit sorted. In other major cities, he said, the process is significantly longer.
“If you were to build a new residential tower in Toronto, it’s three years to get a development permit,” said Wosnack, adding that it could be 18 months in Vancouver.
“The fact that [Raka] will be doing a ribbon-cutting for new residents, one year from today or sooner, is a really helpful part of the housing strategy.”
The Phipps-McKinnon Building, Josan said, was a particularly good fit for office-to-residential redevelopment where other office buildings aren’t always so fortunate. The floor plates are roughly 10,000 square feet, which makes them a good option. Buildings with more than 10,000 square foot floor plates become an issue because ensuring rooms have window access causes a design problem. The Phipps-McKinnon Building elevators were also naturally set up in a way that suits redevelopment with one set servicing floors 11 to 19, while the other set services the bottom portion of the building.
As someone who grew up in Edmonton, Josan said he is proud of Josan Properties for purchasing the building and taking on the project. He said that as long as the Phipps-McKinnon Building project works well the company could consider other buildings Downtown for similar projects.
Twitter/X: @ZacharyDelaney
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