I started reading about dying downtowns across Canada back in the ’80s. Developers built large strip malls on cheap land on the outskirts of cities. Residents tired of poor parking, traffic and multiple-stop errands readily gravitated to the new massive malls with their infinite free parking and one-stop convenience. Marquee anchor tenants and specialty shops were the knock-out-punch combo for downtown businesses.
Creative remedies to this are out there, and plentiful, but the only one I’ve heard about really working is downtown residential development. Yup, it takes more convenience to trump convenience. Having people live beside your business is better than having to draw them there.
Great idea, but how can that happen here? It’s not as if there’s a lot of vacant property or existing empty buildings in Yellowknife, is there? Actually, there is, in the form of some notably vacant office buildings.
Only a workaholic wants to live in an office, so there would have to be considerable renovations to convert empty office buildings to residential living standards. And I expect it would take a sharp pencil to determine if conversion to residential was viable, but I hear residential rents are pretty high here, so, so far so good.
If I owned an empty building I know I‘d be taking a hard look at this. But if had another hundred other buildings that were not empty, maybe I wouldn’t worry so much. And that’s perhaps why Yellowknife’s major landlords, the two big real estate investment trusts (REITs), haven’t been that quick to look at solutions for commercial vacancies here.
Why? In part because someone running a REIT looks at their real estate assets (buildings) as part of a portfolio that needs to be diversified by purpose and geography. Diversification reduces risk by accepting that some properties do better at different times. It’s not hard to imagine a REIT looking at its vacant stock in Yellowknife as commodity play, like keeping some precious metals in a stock portfolio.
This is one of the downsides of REITs for Yellowknife residents. The trusts have deep pockets and can choose to weather a tenant drought.
We are the 0.5 percent
It’s just as likely, though, that being less than a half percent of their assets we are simply under their radar. And any party interested in YK’s downtown revitalization should be pitching as many proposals or incentives as possible to get their attention.
Even in a diversified stock portfolio, there are things managers do to reduce your carrying costs. As with selling puts or calls on your own portfolio, you could shift your building from commercial or mixed use to keep money coming in and cover maintenance costs. REITs have unit holders (shareholders) too.
Would this reduce the cost of living in Yellowknife? If more residential units come on the market… who knows. I think I have heard that trying to lower the cost of living was on some government’s radar.
May be if the REITs thought it was their own idea it could get some traction. We could propose they dive into the discussion about the athletes’ village eight years before the 2023 Canada Winter Games. We could suggest they get involved in creating solutions for seniors who are on growing wait lists for living space.
Who knows? Being in the property management business, they might even have some ideas of their own.
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