The Right Mix: Get Legal Input to Strike the Right Balance in Mixed-Use Developments in Winnipeg

Posted: February 07, 2017 | Last Updated: May 05, 2017

Downtown Winnipeg is on the cusp of reinventing itself. Well-publicized major developments, such as Centrepoint WinnipegTrue North Square, the retro-fitting and new development at 360 and 300 Main Street, the SkyCity project, and other smaller scale developments, including the redevelopment of the Sterling Building, are all examples of important and positive steps for downtown Winnipeg. They also are reflective of two real estate industry trends. 

The first is that they are all mixed-use developments. Mixed-use developments have become extremely popular across Canada. They typically involve a combination of residential, office, and retail spaces within the same building. People of all age groups and stages of life are attracted to living in a downtown mixed-use development. Residents of said developments value living next door to plenty of dining and entertainment options, taking advantage of the generous amenities often provided as part of the mixed-use development, and for some, the opportunity to simplify their lifestyle by ditching a vehicle and living within walking distance of their job or other attractions. Mixed-use developments also make sense for commercial occupants.  Office and retail businesses benefit from operating in a quality, downtown location with a potential built-in customer base living (literally) right on top of their operations, and in some cases, the mixed-use development offers added convenience and flexibility that is important to the employees of the commercial occupants.

However, to make the mixed-use development work, careful planning and consultation by the developers of mixed-use project with their real estate professionals and commercial real estate lawyers is important.  Care must be given to find the right balance between the residential and commercial aspects of the project.  The design and construction of the building and the underlying legal documents must adequately accommodate the interests of residents and the commercial businesses. Residents will demand secure and separate access to their units and to not have their homes overly impacted by commercial deliveries, noise, or smells from the commercial businesses. However, the underlying agreements to reasonably protect these interests cannot be too harsh or restrictive; otherwise, a developer may struggle to fill the commercial spaces in the project. A reasonable solution can and is often found, however, each project is unique and will require a tailor-made approach when the building is constructed and the legal documents are prepared.

The second trend is commercial condos. The SkyCity project is the first project in Winnipeg to market the commercial space in the mixed-use development as Class A commercial condos. As downtown development drives rental rents upwards, some businesses may elect to purchase a commercial condo. While this is far more common in larger centres, this may single a tipping point and another option for the Winnipeg real estate market. The same balancing act discussed above applies to the scenario where residential owners occupy a building with commercial condo owners. The legal declarations and ownership agreements will need to be carefully drafted to ensure that the needs of the residential and commercial owners are reasonably met. 

The next chapter in the development of downtown Winnipeg is here.  With it comes exciting opportunities and new challenges.  At all junctures of every project, large or small, sound planning and legal advice can help ensure that the promise of the mixed-use development matches the reality.

 

Brant Harvey is a Partner at Pitblado Law whose real estate clients rely on for his advice at all stages of their business operations.