If you build it, they will come — unless, perhaps, you build it during a recession.
That appears to be the lesson learned by the developers of Executive Place, the 12-storey office building in downtown Red Deer that remains vacant months after its completion.
“The building was at least a third to a half spoken for verbally before the economic downturn,” said Glenn Moore, a Realtor with Advantage Commercial and a leasing agent for the property.
A joint venture of Beca International Ltd. and Clark Builders, Executive Place boasts more than 100,000 square feet of office and retail space. There’s been interest in the ground floor commercial area, said Moore, but the owners are holding out for larger tenants that would take a combination of retail and office space above. A financial institution or customer-service-related firm would be good fits, he said.
A portion of 10th floor has been set up for shared, short-term use by businesses, with a reception area, boardroom, offices and other facilities in place. But a long-term tenant has yet to be secured for the 4900 50th St. building.
Lease rates were adjusted downward late last year, with the square-foot rental for office space now ranging from $22 to $26.
“They dropped three or four dollars a square foot,” said Moore.
Operating charges would be $11 a square foot, with tenants eligible for a leasehold improvement allowance of $30 per square foot on a 10-year lease. Moore thinks this is pretty good value, particularly when you consider the quality of Executive Place and the amenities it offers, like underground parking.
“The operating cost of the building are lower per square foot than a lot of buildings because it’s energy-efficient, and it’s brand new, so there’s not a lot of maintenance.”
But Moore doesn’t think price has been an impediment for most potential lessees. He noted that many, including some with public sector connections, have been constrained by a freeze on their facilities budgets during the recession.
“We totally believe that it’s been the economic downturn that’s caused the building to sit vacant. And that seems to be changing quite dramatically, so we’re very optimistic that (economic recovery) is going to be the driver, as opposed to the rates.”
Demand for industrial property has been much stronger this year, he said, and interest in office space should follow.
“Recently, we’ve had a number of people looking to upgrade their office space,” said Moore, adding that local options are limited.
“A lot of office space has been absorbed, particularly the higher quality.”
He thinks there’s a pent-up demand for office space that should manifest itself as the economy strengthens. And that bodes well for Executive Place — especially when it starts to fill.
“Once we get an anchor or somebody that’s prominent, and they see the tone of the building, the quality of the building, the quality of the tenants and the quality of clientele that will be attracted to the building, it’s going to make a big difference.
“That building could fill in a very short period of time, with the right economic situation.”