$60M sale of office tower 'defying' downtown trend: Project Lead
9Triple8 building sells amid rising vacancy rates in downtown Edmonton
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A major sale of a downtown Edmonton office building is “defying” the trend of mounting vacancies.
Colliers announced Tuesday morning it has brokeraged a sale of the 9Triple8Jasper tower for more than $60 million, at a time when downtown’s vacancy rate is close to 20 per cent.
“Achieving that sort of a price in this sort of a market, for an income-producing asset, is defying what everything else has been going on,” said project lead Kevin Petterson.
KRP and Associated Engineering are the two main tenants, and more than 700 people are now working out of the building on 98 Street and Jasper Avenue.
Petterson said the owner, Hokanson Capital Inc., was able to overcome market uncertainty and skepticism by spending more than $20 million to renovate top to bottom, adding a fitness centre and retail spaces and upgrading to a LEED Gold standard.
With rising vacancies, he said tenants are flocking to newer, renovated spaces now that they can get lower rates.
Other added other downtown owners are taking note, as evidenced by renovations on the former Associated Engineering building on 109 Street and Jasper Avenue, as well as Scotiaplace.
“They have their pick of where they want to be, and those tenants are all trading up to higher quality office space,” Petterson said.
“What we’re trying to do is say, look – if you spend on your building, there’s light at the end of the tunnel for you.”
Petterson said the sale is also a “vote of confidence” in the Quarters development in the east end of downtown.
Downtown Business Association President Ian O’Donnell said the purchase shows there is still interest in opportunities in the core.
“While we have a challenging vacancy rate to deal with, it is very clear that the market is in transition,” O’Donnell said.
“We have purchasers seeing long-term viability and long-term opportunity in various parts of downtown, and it’s very positive.”