Winnipeg Construction VIII

[Cyro]

Originally Posted by Simplicity

It's been in perpetual limbo for years, but my understanding - and it's always possible this will change - is that it's dead. I guess if the expansion proves to be under-serviced, it'll be revived. But don't forget, that's a very valuable surface lot. In order to hurdle your existing return, you have to do much better than if you were just sitting on a piece of vacant land. My suspicion is this has always been part of the larger hold-up. It's not just the risk of having a mostly unoccupied hotel, it's the risk of losing a major revenue stream all at the same time.

That's an unfortunate update from all the initial excitement surrounding the announcement of the Convention Centre expansion and the Hotels to follow.

I can understand the value of the land and the loss of revenue from sitting on these particular lots for years, but again as discussed earlier, the over saturated market from several years of additions makes it's feasibility questionable.

[esquire]

I wonder whether the former Carlton Inn site might see redevelopment more quickly than Lakeview's site precisely because it wasn't a surface parking lot? If I understand correctly, the old Carlton Inn won't become a new non-accessory surface parking lot because such things are not allowed anymore, they're only grandfathered by the city which understandably makes such sites valuable since there is a finite supply of them.

So if surface parking is not an option, you might as well find a way to get something built instead of letting tumbleweeds roll across your $8 million dirt patch, no?

[Biff]

How about a operating 3 storey hotel or "Inn" with a restaurant in it. A name for the restaurant could be "Aragon" maybe.

[Simplicity]

Originally Posted by esquire

I wonder whether the former Carlton Inn site might see redevelopment more quickly than Lakeview's site precisely because it wasn't a surface parking lot? If I understand correctly, the old Carlton Inn won't become a new non-accessory surface parking lot because such things are not allowed anymore, they're only grandfathered by the city which understandably makes such sites valuable since there is a finite supply of them.

So if surface parking is not an option, you might as well find a way to get something built instead of letting tumbleweeds roll across your $8 million dirt patch, no?

This going to play itself out as a perfect example of the sunk cost fallacy; the idea that you continue to hope for value where this is none despite your best interests.

The city needs to swallow this pill. They screwed up big time because I would question if that land has any value as a hotel site. Given our city's REVPAR and that it's been in decline, there's quite literally no demand without just cannibalizing it from elsewhere. That means the city needs to let go of its hotel dream and find the highest and best use. It also means they're going to admit to the public that the taxpayer is on the hook for many millions in write-downs so we can just get the debt off the books at CV and move forward.

If they're prepared to do that, they may be a more realistic site given they don't have to shoot a golden goose first. But if they hold pat and it turns out there's some demand, Lakeview will devour their market position given their flexibility as a private company and the fact that they've been planning for years.

[esquire]

At this point the damage is done... the City/CV can't recoup the purchase price. Yet the site has some merit as a possible hotel location given that it is next to the convention centre and close to the MTS Centre/CBD area.

To play the devil's advocate here, considering that there is no going back to Biff's suggestion above, and if the City/CV has no reasonable use of its own for this site then why shouldn't they sell it at a loss to someone who WILL build something there? It's understandable that Lakeview doesn't want to risk its dependable surface parking cash flows to build a hotel, but that is not the case at all on the Carlton Inn site.

[trueviking]

I just saw a photo of the Carlton when it was a Sheraton...amazing.

[CoryB]

How about a slightly out of the box idea - do a straight trade between CV and Lakeview. CV gets the highly profitable but undeveloped Lakeview site. In trade, Lakeview gets the larger land area with the higher value. Both sides agree that a hotel starts construction on the former Carlton Inn site within 12 months and that the Carlton Inn site cannot become a surface lot. The deal could further be sweetened by letting Lakeview remain "owner" of the current surface lot until the hotel opens provided it does not experience any unnecessary delays (or alternatively a fixed timeline for handover).

If the hotel site is developed with sufficient underground parking and a couple "beer and burgers" restaurants that pull in the pre-game NHL crowd you could have a huge gold mine.

[Simplicity]

I don't think the land size is the issue. I'm sure Lakeview's development fits just fine on theirs and it's probably of little interest to them to have it any larger.

And I think it's probably true that the surface lot is more valuable unless somebody can prove an above average occupancy rate; I'm not sure that's possible.

As Esquire pointed out - and this is where I was driving with my earlier post - the City needs to sell the land sooner than later and if that means a loss, than so be it. McGowan is already out; if there's another managerial head that needs to roll, so be it. Just get it done. It was another administration's problem and can be spun as such. But now CV isn't just in the position of having screwed the pooch on the valuation, they'd be caught in yet another lie given that only a few months ago McGowan was quoted in the paper as saying they were close to a deal with somebody who was going to pay the $7.5MM purchase price along with another $.5MM in demolition and remediation. We all know that isn't true.

The underlying fact of that purchase was that everybody wanted the Carlton Inn razed because of who was living there and how it was contributing to the area. This was the same rationale used to justify the purchase of the St. Regis.

So it's tough to know what to do, really. Unfortunately, we're going to have to wait and see how the Convention Centre expansion shakes out. If it somehow attracts the huge conventions that require many room nights, we'll get another downtown hotel. If it doesn't, we won't. I'm just not that confident we'll see such a surge that two hoteliers are going to find space in the market for new development.

[yellowghost]

Floating ? Staircase. Active living center.

[bomberjet]

Looks to be made of concrete and steel? I buy it lol

[armorand93]

What do you think is more likely at this point, guys? The Carlton Inn site used for a high-rise hotel, or a high-rise apartment/condos?? Serious question.

[Simplicity]

Originally Posted by armorand93

What do you think is more likely at this point, guys? The Carlton Inn site used for a high-rise hotel, or a high-rise apartment/condos?? Serious question.

I think neither. My personal opinion is that it sits for a long, long time before anything happens with it. Don't forget, SoPo is also slated to be multi-unit residential. Given who sits on the CV board - including Chipman and all his cohorts - there's no way in hell the CV board approves the sale of that site to anybody who is even remotely interested in competing with their development.

And that's just the quasi-conspiratorial answer. The more realistic one is that I'm doubtful there's anybody prepared to do anything at the corner without heavy subsidies, let alone pay anything for the land...

[trueviking]

The hotel has the better chance because it is a contractual obligation of the convention centre development. I'm sure that can be negotiated however.

The subsidy will be the land cost. I have done a couple schemes there and the land cost kills it. A hotel could fit on half the site with the rest being sold off or whatever. Hotels are a very tight margin in winnipeg.

There are still things in the works but it's hard to get traction. Free land would do it.

Should have renovated the Carlton. Would have made a great boutique hotel. A kind of a Drake hotel thing.

[Riverman]

Originally Posted by armorand93

What do you think is more likely at this point, guys? The Carlton Inn site used for a high-rise hotel, or a high-rise apartment/condos?? Serious question.

Surface parking lot.

[esquire]

Originally Posted by Riverman

Surface parking lot.

It can't be that.

[1ajs]

expansion of the rwb that be epic

[Simplicity]

Originally Posted by trueviking

The hotel has the better chance because it is a contractual obligation of the convention centre development. I'm sure that can be negotiated however.

The subsidy will be the land cost. I have done a couple schemes there and the land cost kills it. A hotel could fit on half the site with the rest being sold off or whatever. Hotels are a very tight margin in winnipeg.

There are still things in the works but it's hard to get traction. Free land would do it.

Should have renovated the Carlton. Would have made a great boutique hotel. A kind of a Drake hotel thing.

The Drake is awesome. And the Drake isn't even within an area most Torontonians would normally go to party given that it's closer to Ossington - it's just become a destination spot. Great food, cool bar, and super funky rooms. Personally, I love it. I still think this would be a great idea for the Sherbrook Inn, but there's just no way that ever happens unless somebody can tear up the pawn license and remove the riff-raff.

Anyway, the land subsidy would be the key here, but the optics are just horrific. Can you imagine the outrage when the public found out? Everybody would call this an $8MM subsidy having no idea that the value - not the cost - isn't even close. They'd blame it all on some backroom deal between the administration and 'Developer X' and it would be a public relations nightmare for everybody involved. Frankly, that site isn't good enough to develop at the expense of one's reputation. And that's partially why I think it's a complete albatross. There aren't going to be many people lining up for the accompanying scrutiny and ignorant knee-jerkism that will no doubt emanate from each and every inept, pearl-clutching cre-comm pseudo-journalist and intellectually-bereft leftist member of council in this city who can't understand development finance and our city's market limitations. It isn't worth the risk and it certainly isn't worth the bullshit.

Your point about the contractual obligation is very important here. My thoughts were that the only way a 'free land giveaway' was possible was with an RFP process that kept everything (somewhat) transparent, but that may leave some toes to be stepped on.

And this is why the government should almost never be allowed to step into the market like this. They've now become the biggest hurdle to redevelopment in ways nobody else could.

[blueandgoldguy]

Speaking of hotels, what is happening with the Canad Inns hotel development next to McPhillips Street Station - the one that was supposed to be 20 or so stories high with the huge conference centre?

[1ajs]

in other news someones opened a restraunt in the bell hotel
http://www.winnipegfreepress.com/busines...pe-281579451.html?cx_navSource=d-tiles-2

[1ajs]