True North Puts Bid in for Portage Place

Well, here we are again. Portage Place has received an offer locally this time from Jets ownership and the True North partnership.  The price had dropped like a stone. Starlight had offered just under $70 million that included the mall, parkade and skywalks. The mall owned by B.C. developer Spruceland Mall Limited Partnership (formerly Peterson Group and Peter Young) was valued around $22.5 million. The parkade and land lease which is owned by Forks North Portage Partnership around $47 million.

True North has bid $34.5 million for parkade and land lease. A separate deal has to be struck for the mall. It appears a number of groups have already signed off on the deal including The Forks, the province and the feds. A number of social agencies have said the deal should be rejected and the negotiations with First Nations and Metis should be begin. However, in two years no one (and that means no one) has actually stepped forward with any type of proposal till now. There have been wish lists but no actual plan.

The True North Real Estate Development is the lead on the proposal and consultations are allotted a 12 month window. Jim Ludlow, president of the company, has talked about deconstructing the mall, opening it up  and have housing as a component.  He says it won't be a mall anymore. Beyond that, I suppose it is anyone's guess what it will all turn out as. The one thing they have managed thus far is offering money and a timetable. The Forks North Portage agency has said there has be a re-evaluation of the monetary value of the site but they haven't released anything.

Social agencies have said the space should be open 24 hours and have laundry, showers and community space. Others have said affordable housing. A group of interested parties listed a number of things they wanted but no budget was given. It is likely they believed the three levels of government were going to hand over $400 million that Starlight wanted. However, if some of the governments balked at supporting that, they're not likely to going to hand two blocks to someone else with no plan in place or organization behind it.

Governments are more likely to back things like the Mclaren's Hotel's $12 million housing project to covert all the hotel's rooms in to 150 tiny homes with more modern amenities and and supports for under $550. Now that is a real project, with real management with real costs and timetable. It saves an old building and puts home pride behind it.

The Bay has a redevelopment plan coming and affordable housing is being supported there. And that truly is indigenous-led. The Metis have their Portage and Main development, a hotel planned and just finished social housing on Main Street. Treaty 1 has major work on the Kayong site. Is there an indigenous group ready to take over Portage Place with so much on the go already? If there are interested parties, maybe we will hear a counteroffer. However, nothing yet.

Criticism of True North simply to dismiss them does not solve the issue of Portage Place. Not at all. It remains for sale. Put up a workable plan. That is the benchmark for anyone and everyone out there. Don't ask for $400 million and not have any idea what you would do with it. Don't think you won't pay the mall owner and the parkade owner and get Portage Place for a $1. Unlike The Bay, the building is not nearly as distressed as the department store was. There is value there and saying it is worthless is dishonest.

A few critics blamed the Jets for gentrifying the area making the downtown too expensive. Some are still upset the Eaton's building was torn down. Some blame capitalism, colonialism and and a host of other things. This all might be true. But it doesn't offer solutions. Making up a shopping list of fixes if the goals are not achievable or sustainable is an exercise in frustration. Asking for housing where there are units with washers/dryers, dishwashers, two bedrooms+, pet friendly with utilities included for $600 a month may not support the maintenance of the building in the future. Just ask Lion's Place. A real plan is needed.

Truth is we need tens of thousands of units built every year for years to come. The best strategy might be to support renters and buyers directly rather than getting into building government structures. We have already seen the University of Winnipeg develop several buildings with market rate and below market rate rents. It has formed a cluster of apartments all around the art gallery and more are coming.

Speed is of the essence. It can take years upon years to get something approved. And people can be very contrarian. Many say they support more housing but not near them. This was from a 2023 poll in Toronto and is reflective of the whole country. Almost every housing project seems to draw a long zoning debate even if it is adding space to your own home. In recent months, density has been considered a threat. Thirty years ago most older neighbourhoods had more people living in them now and were considered good places to live.

Portage Place mall has been in place for 36 years and has had pads atop east and west and no apartments ever built. They money siphoned off to The Forks since 1994 could have made a difference. But then maybe we would be talking about how The Forks went under. Our large downtown has meant focus on developments is ever shifting. A crisis happens in a new place every decade. The development on north Portage had quite a lot of housing built but those final two spaces remained empty. And cash spent on the parking never went to anything else on north Portage. It is easy to see why disdain for the area grew as nothing was ever re-invested.

From the perspective of True North Real Estate, Portage Place represents a distressed asset across from all of of their developments. The most important part of the mall is the 1000 car parkade. Without it, no deal can be made. The parkade is the jewel in the crown. It makes money. It has always made money. It just doesn't have money go to mall owners. That changes if all of Portage Place is owned by one entity instead of several. I have lots of questions about the $34.5 million of the parkade and land rights sale going to The Forks but will save for another post.

The mall itself has little value but it will have to be paid something to the tune of under $20 million. Portage Place has been for sale for years but it does have some fine tenants like Prairie Theatre Exchange and Manitoba Chamber Orchestra, dental offices, phone companies, university offices and Expo Live. But there are too many retail vacancies and the food court is considered is struggling as well.

Some people have said they think True North is nuts to buy Portage Place but the money spent can be made back on the parkade alone. Taken from hints from what Jim Ludlow has said, it is very likely the mall will be broken up with Edmonton Street once again passing through to the other side. It won't be a motorway in the traditional sense. Likely, it will be one lane only with wide sidewalks connecting to the Promenade on the other side. A second floor enclosed skywalk will fulfill the government's request to maintain connectivity all the way to The Bay. However, it also is an important link for the True North's arena to have direct connection to the 1000 indoor parking spaces of Portage Place.

The interesting part will be the west portion of Portage Place. It is the widest section, also has a pad for a tower on it and has the walkway that goes all the way to The Bay which should have a plan announced soon. Is that west section big enough for a future arena? Now I know you are saying...hold on, we have an arena. Yes, we do but we also have two hockey teams. And Winnipeg Ice are looking for a new home. Do we also get a lacrosse team? A basketball team? A women's hockey team? Could we be looking at two arenas? Don't rule it out. 

The entire length of Portage Avenue is important to the vitality of downtown. The entire reason for Portage Place's development was that while south Portage Avenue was vital with stores, north Portage was seeing more vacancies and in some cases, one building burned down and wasn't replaced. There were some bright spots to be sure such as Kennedy Street and some specialty shops but no new investments and a few hotels that were particularly rough.

By 1980, Manitoba was in a deep recession. Huge businesses had shut down. The first of tens of thousands of people were leaving the province, moving headquarters, closing factories and production. It was awful. In 1981, the Core Area Initiative was formed as a three levels of government program to cover a huge amount the inner city with a budget of $196 million over ten years. That is $600 million in today's dollars. Led by Lloyd Axworthy from the federal side, this was the creative force behind housing renewal all over the inner city, The Forks, Portage Place, social programming and private investments from Air Canada, Investor's Group, Cadillac Fairview, small businesses everywhere, The program ended in 1991 and by 1994, The Forks was almost bankrupt. 

A new Winnipeg Development Agreement was made from 1996 to 2001 but it was city-wide and did not carry on with nearly as much money. At $75 million, it went fast and when support ended, some projects began to whither just like The Forks did in 1994 without money from some other revenue sources. From 2001 on most city councillors have been focused on massive infrastructure further and further away from centre of the city. 

Places like Portage Place and North Portage have been stuck. The mall owner doesn't want to invest too much because they can't make the margins that other malls make. And since they didn't own the land, there was far fewer reason to change the building to another function. True North has worked on several building projects both north and south of Portage Avenue. They have been working on indigenous partnerships as a business longer than many companies. They have also been able to leverage money from governments for projects and other private businesses have joined in on the efforts.

The last time North Portage was shown some love tens of millions was spent by other businesses and organization. The criticism of the mall ignores the hundreds of housing units built. It ignores the hotel built, Investors Group moving its headquarters there, the Free Press building being restored to government offices, IBM building offices, Winnipeg's first IMAX, Prairie Theatre Exchange and Air Canada offices. 

It is unlikely that True North will abandon if they take the reins. And they certainly won't transfer future revenue to The Forks like what has been happening since 1994. It will be interesting to see what happens from here but these are no carpetbaggers like the last bunch who came to town to fleece the taxpayers. The Chipmans and True North have added considerably to the employment, tax base and downtown since 2011.