Slate Asset Management LP is wagering $60-million on a turnaround in Calgary’s moribund commercial real estate market by launching a top-to-bottom renovation of one of the city’s landmarks, the 40-floor Scotia Centre.
At a time when 27 per cent of Calgary office space is vacant, reflecting a prolonged slump in the oil patch and the opening of several new towers, Toronto-based Slate is making a contrarian investment in a 42-year-old tower. The plan, released on Thursday, starts with renaming the 620,000-square-foot building as “Stephen Avenue Place,” to reflect the fact that Bank of Nova Scotia recently moved its Calgary-based employees to a nearby tower owned by Brookfield Property Partners LP.
Slate is teaming up with Oliver & Bonacini Hospitality (O&B) and Concorde Entertainment Group to open a restaurant on the top floor of Stephen Avenue Place; the O&B chain already serves power lunches atop a Toronto office tower at a restaurant called Canoe. Andrew Oliver, CEO of O&B, said the new rooftop restaurant will be “elegant and sophisticated.” Tenants will also get a gym and games lounge, and there are plans for a new food hall, and an eatery, bar and patio at street level.
Local politicians said Slate’s investment is a sign of the oil patch’s improving prospects. “Slate’s vision for the former Scotia Centre will transform this part of Stephen Avenue into a vibrant restaurant, retail and office hub,” said Druh Farrell, a Calgary city councillor, in a news release. “Their investment shows confidence in Calgary’s rebounding economy and is a tremendous opportunity to breathe new life into a key corner in our downtown.”
Calgary currently has the highest office vacancy rates in the country. The national average is 10.7 per cent, and in the Toronto and Vancouver markets, less than 5 per cent of office space is empty.
The planned renovation of Stephen Avenue Place marks the latest in a series of Slate investments in Alberta, and investment banking sources say the company is expected to make additional acquisitions in the region. Slate, which invests approximately $6-billion on behalf of institutional investors, has increased its Calgary footprint to 2.3 million square feet during the current downturn with the purchase of 21 commercial properties, including 12 downtown office buildings, over the last 18 months.
“Our team has extensive experience in successfully repositioning overlooked and underappreciated properties,” said Slate founding partner Blair Welch. “Simply put, there is no better destination in Calgary for working, dining, shopping and celebrating than Stephen Avenue Place. We are excited to be part of Calgary’s future.”
Slate acquired Scotia Centre in 2017, as part of a $1.14-billion acquisition of a 97-property portfolio in Western Canada, Ontario and the Atlantic provinces from Cominar Real Estate Investment Trust.
Slate was founded by brothers Blair and Brady Welch in 2005 – both previously worked in real estate development. The privately owned firm has a value approach, attempting to buy buildings in out-of-favour regions for less than it would cost to build them. Slate now has 71 professional employees, and owns properties in Canada, the United States and Germany.