It was announced by the City that they are purchasing the land upon which the new Cowboy’s location sits, at 1088 Olympic Way SE. What I found so interesting is that the City set a new record for beltline land prices with this purchase.
The City will be buying the parcel for $8 million. As that lot is 0.30 acres, this means that the price per acre (the easiest way to compare values) is $26,666.666.67. This is a shocking (yes, shocking) price for a piece of land that, while far more valuable than it would have been ten years ago, is far-removed from the downtown core.
This price represents what seems to be the second-highest per-acre rate paid for beltline land since…well…forever. Kind of. In November 2007, a smaller parcel of 0.161 acres (the smaller the parcel, the higher the price, all other things being equal…usually) at 127 – 13 Avenue SW sold for $5 million, or just over $31 million per acre. However, that was a land consolidation by Torode Realty Group (TRL), and that property was directly across the street from the present Hotel Arts (owned by TRL) and the two announced projects that will neighbour it, Gallery at Hotel Arts (a commercial development) and Condo Arts. So this was a motivated buyer.
But here’s the kicker. According to RealNet (a company that tracks major commercial real estate transactions):
The aggregate price of the properties included in this land assembly of $12,250,000 represents a price per acre of $13,857,466, a price per square foot of site area of $318, and a price square foot buildable of $106 based on the maximum allowable density at the time of sale.
Here’s where the “kind of” above comes in. You could argue that the $26,666,666.67 per acre paid for the Cowboy’s property is THE HIGHEST price ever paid for beltline land.
Including the transaction already referenced, here are the 13 sales in the beltline since 2001 (and probably earlier…or ever) that have sold at $10 million per acre or greater:
| Sale Date | Address | Price | Size (ac) | Price per acre |
| 09-Nov-07 | 127 13 Ave SW | $5,000,000 | 0.161 | $31,055,901 |
| 26-Mar-08 | 633 10 Ave SW | $9,700,000 | 0.373 | $26,005,362 |
| 06-Feb-08 | Stampede Park Expansion | $14,385,000 | 0.617 | $23,314,425 |
| 22-Apr-07 | 201 10 Ave SE | $11,700,000 | 0.6 | $19,500,000 |
| 07-Sep-07 | 1104-1108 – 4 Street SW | $9,200,000 | 0.562 | $16,370,107 |
| 03-Apr-07 | 633 10 Ave SW | $5,430,000 | 0.373 | $14,557,641 |
| 04-Jan-08 | 113 13 Ave SW | $1,500,000 | 0.121 | $12,396,694 |
| 30-Nov-06 | 119 12 Avenue SE | $1,890,000 | 0.161 | $11,739,130 |
| 04-Feb-08 | Stampede Park Expansion | $14,385,000 | 1.251 | $11,498,801 |
| 07-Aug-07 | 126 13 Ave SE | $1,850,000 | 0.161 | $11,490,683 |
| 31-Dec-07 | 115 13 Ave SW | $1,750,000 | 0.161 | $10,869,565 |
| 02-May-06 | 802 11 Ave SW | $3,100,000 | 0.3 | $10,333,333 |
| 09-Nov-07 | 109 13 Ave SW | $1,200,000 | 0.12 | $10,000,000 |
See how quickly that list drops to $10 million? Thirteen sales exceed that mark. Since ever. I know what a bright reader you are and you’ve noticed something else as well. All of these high-value transactions happened before everybody knew the economy was going in the crapper. There has only been two beltline transactions since 1-Jan-2008 that were not institutional- or government-related transfers. One is the next-highest-price-per-acre transaction in March of 2008 (rumours of downturn, but not yet readily apparent), and 7th highest, which was part of the TRL consolidation.
Note that, while buildings may indeed exist upon some of these lands at the time of sale, the value is being determined based upon vacant land, because of the intent to redevelop the property, just as in the case of the Cowboy’s property.
Why, pray tell, is the City paying absolute top dollar for this property at this time? This is a question I think many would like an answer to.
Given that this property is going to be bumping up against the Stampede Park, one could argue that it is a very highly valued property. After all, it has a newly-minted CC-X land use designation, giving it a very wide range of potential uses, and thus has significantly more value than if there were very few potential uses. Newly minted? Indeed, last year at this time, this property was governed under the zoning known as DC 53Z95. This was a restrictive zoning that had as its permitted uses:
- Ancillary commercial uses
- Essential public services
- Parks and playgrounds
- Utilities
- Grocery stores
- Home occupations – Class I
- Offices
- Personal service businesses
- Retail stores
There were a wide range of discretionary uses, meaning that an occupant who intended to use the property for one of those (such as Cowboy’s–drinking establishments were a discretionary use) had to apply to the City to be able to occupy, and request permission with the City being able to deny that occupancy.
Sometime between then and now, that land use changed. It was likely done as part of the big switchover to new zoning throughout the beltline that took effect in January of this year. The permitted uses under the new CC-X zoning are:
- Park;
- Sign – Class A;
- Sign – Class B;
- Sign – Class D;
- Utilities;
- Accessory Food Service;
- Beauty and Body Service;
- Catering Service – Minor;
- Convenience Food Store;
- Counseling Service;
- Fitness Centre;
- Health Services Laboratory – With Clients;
- Home Occupation – Class 1;
- Household Appliance and Furniture Repair Service;
- Information and Service Provider;
- Library;
- Medical clinic;
- Office;
- Personal Apparel Service;
- Pet Care Service;
- Photographic Studio;
- Power Generation – Small;
- Print Centre;
- Protective and Emergency Service;
- Radio and Television Studio;
- Restaurant: Food Service Only – Small;
- Retail Store;
- Service Organization;
- Specialty Food Store;
- Take Out Food Service;
- Temporary Residential Sales Centre; and
- Video Store.
So, as of the change in zoning, that property just got a whole lot more valuable. How unfortunate that the City didn’t buy the property before the zoning change.
What’s that? Oh, you’re right! The City does have control over those zoning changes. And they did keep a whole bunch of other parcels in the beltline under their former DC land use guidelines. Why not this one, given that they must have been planning to buy it for some time.
Perhaps they only decided last week, however, that they needed this property in order to construct a thoroughfare at that location. Unfortunately, that is not the case.
The thoroughfare is referenced in the following map from the City’s Beltline Area Redevelopment Plan.
(the pink bridge-y thing is the underpass, the red arrow identifies the Cowboy’s parcel)
The date on that page is October 2005. So well before Cowboy’s even occupied the space, the City knew they were going to want that property.
So IF it can be argued that the property is more valuable as a CC-X rather than DC 53Z95, why rezone it earlier this year? Why give the seller more negotiating power on the eve of purchasing his property? Why would the City giftwrap and offer the person they are trying to purchase the property from an argument that the property is incredibly valuable?
This situation is quite flummoxing. To summarize, the City has paid the highest value per acre ever paid for a property in the beltline, to a person who the City HAD to know would hold out for a great price, after handing him or her a great argument on why they should hold out for a better price, in the middle of a recession that may soon get much, much worse.
If the owner was asking an unreasonably high price, the City always has the option of expropriating the property, and going before a board of arbitration to determine a fair price. Based on the prices that you see above, do you get the feeling that they’d have determined almost $27 million per acre as a reasonable price? I sure don’t.
It seems to me that the City has buggered this purchase severely. Sure it only amounts to maybe two or three million dollars overpaid. But that two or three million is yet another reason why the City proposed last year to increase taxes by double digits.
