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Downtown Winnipeg aims for the big leagues

The Winnipeg Jets will bring a lot more than NHL hockey to the city's downtown when they start playing this fall – they carry the promise of a development boom to complement what is already a revitalization success story.

The Jets – or whatever they end up being called – have landlords and brokers alike salivating at the prospect of a retail and hospitality boom in a city that has already drastically improved its downtown over the past decade through a concerted effort to build condos and rental housing.

On a warm day, the downtown bustles with thousands of workers – recently relocated from the suburbs by Manitoba Hydro – buying hot dogs and French fries from stands. The University of Manitoba and the University of Winnipeg have both expanded their downtown campuses, and the government is slowly relocating its offices to more central locations.

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And that's to say nothing of the Canadian Museum for Human Rights, which is expected to draw 250,000 visitors annually when it opens next year.

"In the days following the NHL announcement, the interest in downtown has really accelerated," said Wayne Pratt, a Winnipeg-based managing director at Colliers International. "We think the real winners from this will be the parking lot operators and property owners who are sitting on land that developers will want to get their hands on."

While the American Hockey League's Manitoba Moose have been playing at the MTS Centre since it opened in 2004, retailers and restaurateurs didn't feel the need to overhaul their offerings for the team's 8,000 spectators per game. There was also little need for additional hotel space – something that will change the minute the NHL team and its 15,000 fans descend on the city.

It's not the first time the MTS Centre has come to the rescue of downtown Winnipeg. The seven-year-old arena sits atop what was once the most coveted retail real estate in this city – the Eaton's store.

The decision to place the arena on such hallowed retail ground was hugely controversial. But since then, it has been credited for driving interest in downtown living by injecting vibrancy into the city's nightlife.

"The community was opposed to tearing down a building that once meant so much," said Mr. Pratt. "But it was the right thing to do, and all of this is just further proof. Everyone downtown will be able to walk to an NHL game in five minutes, and stop at bars and restaurants like in any other big league city."

Wayne Chernecki, president of Redcliff Realty Management, is responsible for the downtown City Place shopping centre. He said foot traffic has increased exponentially since the arena was built, and retailers are anxious to stay open later to take advantage of the crowds associated with the NHL.

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"The MTS Centre has already been a runaway hit when it comes to bringing people downtown for concerts," he said. "That will only get better with the NHL, and that has to be good for retailers."

The NHL team's ownership group is working to secure land next to the arena for a high-end hotel and office complex to capitalize on the increased foot traffic, and national restaurant chains are scouting the area for space.

"It's a nice block of land, and though there are a few small pieces missing and they are hesitant to talk about it, they do have a good vision in place," said Mr. Pratt. "We know they have a good lead tenant for the office space, and a high-end chain is definitely interested in a deal that would put them right across the street."

While the NHL may be forcing retailers to accelerate their search for space, the city has been the focus of their attention for several years now, as its growth has outpaced that of other Canadian centres.

Retail sales are up 9.2 per cent through the first part of the year, according to a report by Avison Young. Vacancy rates in the city's strip malls and power centres fell to 1.9 per cent from 3.3 per cent in 2010.

"Winnipeg's hungry consumers will no doubt welcome increased competition," Avison Young stated in its 2011 outlook for the city. "Despite some competition from the online shopping community, we anticipate new developments and new restaurants will come on stream to satisfy consumer demand."

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Meanwhile, more than 50,000 immigrants have relocated to Winnipeg in the past five years. The city's economy is expected to expand by 3.5 per cent this year.

"The downtown has been steadily improving over the last few years," said Wes Schollenberg, managing director of Avison Young's Winnipeg operations. "But there has been an uptick in interest in everything from national bar franchises to local entrepreneurs thinking of opening something. The NHL has put the downtown over the top."

The retail market has been tight because landlords are hesitant to build. Construction costs are high in the prairie city, keeping inventory steady at around 18.6 million square feet. Rents have held steady over the last several years.

Office space is also in demand. Winnipeg's vacancy rate is the second-lowest in the country, after Regina, at 4.8 per cent. There is little difference in price or vacancy between suburban and downtown space, because there is so little space available.

Notable projects in Winnipeg:

  • The Canadian Museum for Human Rights is one of the first national museums located outside Ottawa and the 12 storey structure is expected to attract 250,000 visitors annually when it opens next year.
  • A $42-million structure at the University of Manitoba will house 360 students. The university has also committed to spending $33-million toward its Art and Research Technology Laboratory.
  • Union Bank Tower is undergoing a $27-million overhaul. It will have three restaurants at ground level.
  • A new $30-million hotel is being built on the grounds of the Health Sciences Centre. It will house the family and friends of hospitalized patients.
  • Bristol Aerospace has started building a $120-million research facility at its Winnipeg plant as part of its commitment to building F-35 fighter jets.
  • A new airport terminal will feature 200,000 square feet of retail space. It will be part of a half-billion-dollar redevelopment plan for James Armstrong Richardson International Airport.
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