Retailers so key to Lansdowne Park, GoodLife could temporarily take over heritage building - Action News
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OttawaAnalysis

Retailers so key to Lansdowne Park, GoodLife could temporarily take over heritage building

Lansdowne 2.0's financial future hinges not on its sporting facilities, but on the profitability of its retail arm. Can it carry the project?

Retail is Lansdowne 2.0's moneymaker. Can it carry the project?

a night-time illustration shows people walking around a paved area and sitting at tables with a lit-up tower in the background
The latest renderings for Lansdowne 2.0 showcase the two-storey retail space set to be built underneath a pair of residential towers. (City of Ottawa)

The redevelopment discussionsmay focus on the state of its sporting facilities, but there's no doubt that Lansdowne 2.0's financial future hinges on the profitability of its retail arm.

With $419 million on the line for the urban lifestylepark's latest redesign, big-name critics say they needproof the revenue source is sound.

In fact, holding onto major businesses is so important thatGoodLife Fitness could take up residence in the Horticulture Building a heritage asset the City of Ottawaonce spent $7 million to move 120 metresduring the potential construction.

"Retail is critical to the affordability of the overall partnership and the business case for redevelopment," city staff wrote in the 218-page report set to be presented to councillors this week, noting that the retail strategy contributes to Lansdowne's "year-round vitality."

Detailed financial projections suggest thatretail wouldbring in $1.08 billion, after expenses,from 2012 to the end of 2066, enough to offset substantiallosses from the stadium and the Ottawa 67's hockey franchise.

"We can't know [if that's realistic]becausethey're hiding a lot of the documentation," said Michael Wernick, the University of Ottawa's Jarislowsky Chair in Public Management and former clerk of the Privy Council.

He, and others, arguethe public deserves to know more.

"It's a lot of taxpayer money. It's taxpayers in every corner of Ottawa that are at risk of not getting their money back."

Major retail expansion gives'no financial benefit'

While the initialLansdowne Park redevelopment undoubtedly revitalized the site, it has so farbeen a financial failure.

The public-private partnershipwith OttawaSports and Entertainment Group (OSEG)has generated no income, withretail surfacing asthe only steady moneymaker.

Under the Lansdowne 2.0 plans, the area of retail space housing the GoodLife Fitness and team stores will need to be torn down so the aging Civic Centre and the stadium's north-side stands can be replaced.

OSEG's original plans had called for the rebuilt structure to add 67,000 square feet of retail, but the city and accounting firmErnst&Young found it would provide"no financial benefit," citing the added cost of construction and financing.

People stand on a paved boulevard in early autumn.
One aim of the Lansdowne 2.0 redevelopment is getting more people to the site on days without sporting events. (Sara Frizzell/CBC)

The revised plan will focus on restoringlost space, adding a scant 8,000 square feetand ensuringa second-floor areasuitable to host GoodLife Fitness a tenant known to "generate traffic".

The financial due diligence report noted "shortcomings in OSEG'smodel," suggesting it overlooked"real-world leasing complexities like tenant rollovers, vacancy lags, and the variable nature of rental growth."

Take predictions with 'grain of salt': economist

The latest iteration of the Lansdowne project also aims to address concerns about the complex system of financial returns by simplifying the "waterfall" distribution process and including an "agile" audit carried out by the city's auditor general as the project rolls out, not afterwards.

Prominent figures who've called foradded transparency including Wernick, along with former parliamentary budget officer Kevin Page and former federal cabinet minister Catherine McKennadon't seemconvinced the partnership has gone far enough.

"We need to take these predictions with a grain of salt," saidNeil Saravanamuttoo, former chief economist of the G20's Global Infrastructure Hub.

Henoted how far they stretch into the future, saying "obviously a lot can happen between now and then."

Saravanamuttooalso suggested that whenErnst&Young described OSEG's retail assumptions as "optimistic," the consultant reallymeant "unlikely to ever happen."

Wernick was less vocal on the specifics, but said "the onus is on the mayor and councillors who support the project to show that the risks are reasonable."

A park with a football stadium next to a canal.
A drone view of the Rideau Canal and Lansdowne Park in Ottawa in June. (Michel Aspirot/CBC)

What happens to retail during construction?

The city and OSEG are set to share the financial repercussionsofthe temporary loss of retail space and stadium seating, pegged at $10 million.

The partnershipdoes lay out a plan to maintain its affected "anchor tenant."

The retail partnership aims to honour its lease by relocatingthatbusiness not expressly identified in this area of the report, butsuggestedelsewhere to be GoodLife into another existing LansdownePark retail space.

If that's not possible, the Horticulture Building will be made available for what's expected to be two to three years. The tenantwould "continue to pay rent and operating costs," while any community events would be moved to the newly constructed event centre.

Saravanamuttoo said the city should do everything possible to accommodate GoodLife, but access to the Horticulture Building would be "a real problem" since it's such a great community space.

A brick multipurpose building in a city park.
Lansdowne Park's Horticulture Building in March 2020. (CBC)

Councillor warns businesses tobe 'very concerned'

CapitalCoun. Shawn Menard, who represents the area,warns that up to 10years of construction could prove quite disruptive to the overall site.

He also said the best predictor of the futureis the past.

"I think businesses should be very concerned here,"he said. "Anchor tenants have already left. We saw the PetSmart leave, we seenow the Bank of Montreal is leaving this will have reverberating repercussions for a long period of time if it goes forward."

A group of people follow a city councillor across a street on a tour.
Capital Coun. Shawn Menard, seen here leading a group on a tour of Lansdowne Park, says prolonged construction could hit retailers. (Giacomo Panico/CBC)

After the disruptions end, the city and OSEGseem confident that the revitalized site will getpeople shopping and eating at the parkon days theOttawa Redblacks aren't playing.

Saravamuttoo is less convinced.

"For anyone that's walked the Lansdowne site, it's really hard to understand how we're projecting a billion dollars in retail profits," he said.

"On game day, and at the farmers'market, there's lots of people around. But any other time at Lansdowne, it's quite frankly a bit of a ghost town."

The Lansdowne 2.0 proposal will head to a joint meeting of the planning and finance committees on Thursdaybefore being presented to a special city council meeting on Nov. 10.