NEW WESTMINSTER SELLS OFFICE TOWER FOR $36.5M
The city has sold the Merchant Square office tower to a company owned in part by two Vancouver tycoons, including well-known philanthropist Joe Segal.
The eight-storey building is under construction at the corner of Columbia and Eighth streets. It sits atop Anvil Centre civic facility.
The tower has fetched $36.5 million for the city, and the price does not include the three levels of parking or the “tenant improvements” needed to lease the space.
The building’s new owner is 777 Columbia, a company jointly owned by Segal’s Kingswood Capital Corporation and CRS Group of Companies. Developer Suki Sekhon runs CRS.
“We’ve been looking at it for a few years. It’s a growing area and we think it’s got great potential,” said Sekhon, who said the building has no tenants confirmed.
“For now it’s vacant. It’s a bit of a risk, but we feel it will be leased up because of its location and all of its amenities. It’s close to SkyTrain, New Westminster is central. We just felt it was good value with the civic centre going in and all the changes going on there.”
Sekhon said CRS will be patient waiting for the right tenant, although he wouldn’t say what type of business it would be.
“That’s the million dollar question at this point. You never know what comes along. It could be an accounting firm, a legal firm, you don’t know at this point,” said Sekhon.
Since it would take a while to get permits to fit it out for a tenant, Sekhon doesn’t expect any leasees in the building until early 2015.
The sale price is for the office tower shell only, according to the city.
The purchaser will pay for tenant improvements and leasing the 137,000 square feet of space. The city had budgeted for $9.5 million in case the office tower needed to be finished for tenants.
New Westminster retains ownership of the Anvil Centre as well as three levels of underground parking. The project budget for the parkade was $12.5 million.
According to its website, CRS acquires, manages, develops, leases and builds commercial, residential and recreational properties in Western Canada.
Segal is an Alberta native who started a war surplus business in Vancouver in 1946 after serving in the Second World War.
In the 1950s he founded Fields department stores. He’s also been part of Marshall Wells hardware stores, Zellers and Hudson’s Bay chains. In 1979, he started Kingswood, a venture capital company that deals in real estate and acquires companies to fix. Acquisitions have included a $150 million deal for Block Bros., which now operates as First National Properties.
“The involvement of such a respected business luminary as Mr. Segal in our city is solid proof that New Westminster is once again being seen as a great place for business to thrive and grow in Metro Vancouver,” said Mayor Wayne Wright.
As a board member for 12 years and chancellor for six, Segal helped establish the Simon Fraser University Harbour Centre campus in downtown Vancouver. He was also the major benefactor for the SFU Segal Graduate School of Business.
Lorne and Joe Segal also sold an office tower in Vancouver to the Vancouver Olympic Organizing Committee at $11 million below its $35 million appraised value.
In 2011, Uptown Property Group (UPG) pulled out of a tentative partnership which would have seen them build the office complex project with the city.
There was no outside interest in stepping into Uptown’s shoes.
The city decided in late April 2012 it would build it anyway, confident it would be able to sell the complex. The budget for the tower at that time was $33 million.
The Anvil Centre’s price tag was $41.5 million, paid mostly through Development Assistance Compensation casino money.
Wright said in 2012 the complex would be a huge asset for the city and would be sought after. He predicted at a minimum it would be leased by the November 2014 municipal election.
“When we made the decision to pursue office tower construction in 2012, we did so knowing the many benefits that this project will bring to the city,” said Wright on Monday.
But in the meantime, the city had to pass a bylaw to borrow up to $59 million to build the new civic centre and office tower.
The bylaw flew under the radar until a community group, led by former mayoral candidate James Crosty, started a petition to force the city to hold a referendum on its decision.
“The public has not approved building an office tower on the taxpayers’ backs,” said Crosty in July 2012.
Provincial law required more than 4,500 signatures of registered New Westminster voters. But by the Aug. 6 deadline only 2,100 had signed the petition.
Although UPG offered to build both the civic facility and the office complex, it wanted to do the office part first. Coun. Bill Harper said in December 2012 that the city couldn’t agree to that because it wanted to keep control of how the centre was built and what went into it.
The opening of the Anvil Centre is anticipated to be this spring. The crane recently came off the top of the office complex, but work continues on its interior.
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