Calgary's Barron Building Would Make A Good Movie

Recently I received an email from Citicore Associates Real Estate Inc. outlining the 30+ year saga behind the redevelopment of Calgary’s historic Barron Building from office/movie house to residential that read like movie script.

Regular Everyday Tourist readers will know I have been following downtown Calgary’s conversions of office building to residential since before the City of Calgary created its incentive program in 2021. Back in 2017 I wrote in my Calgary Herald column “Office-To-Residential” Conversions Won’t Save Downtown” and more recently “The Fine Art Of Transforming Offices Into Homes” in December 2023. In the first column I questioned the wisdom of subsidizing private developers to convert their outdated office buildings to residential and in the later I question if the addition of more people living downtown will revitalize the downtown in the future.

While I believe the City of Calgary has developed a robust incentive program that will see some successful office conversions, I have to wonder why they would contribute $8.5 million to the very expensive conversion of the Barron Building into residential homes given its history. The good news is the money isn’t paid until the project is complete.

I was given permission to post the email on my site as a guest blog to get more feedback on Calgary’s innovative and controversial “Downtown redevelopment Incentive program.” Have a read and let me know what you think.

The Barron Building Saga

On behalf of the Barron family, Citicore Associates Real Estate Inc. sold this 11 storey, 98,000 sq. ft. office building for $5,700,000 in 1981 to the Welti Construction family, from Switzerland.  After Pierre Trudeau’s National Energy Program and the collapse of the oil and gas industry, Confederation Life foreclosed and offered the property for sale in 1992 via a tender process.  We understand that three of the bids received were:

• the winning bid of $257,000 by Blake O’Brien of Newel Post Developments,

• a bid of $0,

• a bid of minus $600,000 i.e. Confederation have to would pay the prospective purchaser $600,000 if they acquired the property.

After 15 years (1992 to 2007) of leasing efforts by Newel Post, the property was still substantially vacant, with only the movie theatres operating. In July 2007, the property was acquired by Platinum Equities, a real estate syndicate that solicited minimum investments of $50,000 each from private investors.  The purchase price was $22,000,000, or $224 per sq. ft.

The required renovations, including asbestos removal, new elevators, mechanical, windows and leaseholds, were estimated at $19,000,000, for a total of $41,000,000, or $418 per sq. ft.  The property has no parking.  At the same time the building was proposed for historical designation which would make renovations even more expensive.  The projected rental rate to attract office tenants after completion of the renovations was $38 per sq. ft. net. 

Towards concluding the sale to Platinum, the vendor (Newel Post) took back a mortgage.  Renovation work ceased in 2007 and Platinum and Newel Post were in litigation. Platinum subsequently went bankrupt and the principals of the company were charged with fraud.

The Saga Continues

In May 2008, title to the property transferred to Riaz Mamdani (the most prolific private investor in Calgary’s history) at a value of $26,200,000, with the following encumbrances remaining on title:

• Encumbrance to Newel Post for $22,000,000,

• Mortgage to Harbour Capital for $16,000,000,

• Mortgage to TCC Mortgage Holdings for $45,795,000,

• Vendor’s Lien by Newel Post,

• Certificate of Lis Pendens regarding the TCC mortgage,

Photo credit: Kaitlyn Coholan

In Dec 2016, Mamdani was shot several times as he left his Mount Royal home in his Rolls Royce.  He survived, no arrests have been made.  In Mar 2017, a Calgary court ruled that a class action lawsuit against Platinum and Mamdani could proceed – an alleged $200 million real estate fraud.

In November 2018, work finally began to convert the property to an apartment building - 94 apartment units would be developed, at a cost of $44 million; this equates to $468,000 per suite.  The basement of the Barron Bldg was to be converted to underground parking.

In December 2019, 46 Calgary office buildings owned by Mamdani’s Strategic Group went into receivership (Alvarez and Marsal was the receiver) with mortgages totalling $650 million.  In the proceedings, the Barron Building was listed as being subject to a class action lawsuit.  At the time, the vacancy rate for class B office buildings in downtown Calgary was 39%.  And, the entire north elevation of the building, on all levels, had been opened up and was covered with tarpaulins.

In September 2021, Calgary city council approved a $7.5 million taxpayer funded contribution towards the costs of completing the Barron Building’s conversion to residential suites. A September 13, 2021 CBC report stated the funds ‘won’t flow until the project is complete as per the conditions of City’s “Downtown Calgary Development Incentive” program. 

Huge Risk

The question is, what developer would purchase the property and take on the risk of this conversion?

On Mar 2 2022, Mamdani was charged with assaulting his girlfriend, Calgary lawyer Kate Abbott.

On Mar 15 2023, the Calgary Herald reported on a ceremonial sod turning with Riaz Mamdani and Mayor Jyoti Gondek for the renewed conversion plan.  The city would contribute $8.5 million of taxpayer funds for the conversion to residential units - one million more than originally announced.  Mamdani now estimated the overall investment would be $100 million, to create new 118 apartments; this equates to $847,000 per door.

Last Word

A large construction crane, which had been erected on the site for several months, began working in the fall of 2023.  The Barron Building is unique – a downtown office building which has remained virtually vacant for 30 years despite several office building booms.

Barron Building History

“The landmark Barron Building in downtown Calgary—constructed between 1949-1951—is one of its finest examples of modern architecture and has historically played a crucial role in solidifying the city’s position as the centre of Alberta’s oil industry. Clad in buff-coloured brick, Tyndall limestone, and polished black granite, the 11-storey Art Moderne office tower designed by prominent local architect Jack Cawston also houses the two-screen Uptown Theatre (the last historic movie house in the downtown core), which until recently played an important role in the city’s cultural scene. Despite Edmonton’s proximity to the 1947 Leduc oil strike, the Barron Building’s first-class office space quickly drew oil industry occupants, sparking a surge in Calgary office construction that rapidly made it the undisputed centre of the petroleum industry.”

(source: The National Trust of Canada)