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For sale: two city buildings in prime spots

For sale: two city buildings in prime spots

The real-estate arm of the city of Montreal is poised to sell two buildings in prime downtown locations that have been sitting half-empty for years, The Gazette has learned.

The two buildings, located near the Bell Centre, are among hundreds of thousands of square feet of downtown Montreal real estate that has recently changed hands - or is to be sold off - for new office and residential projects, at a time when land prices have reached all-time highs.

The buildings, which are to be put up for tenders this year by the Société d'habitation et de développement de Montréal, are located on sites originally destined for the third phase of Quebec's ill-fated E-Commerce Place. Quebec's Department of Finance mandated the SHDM to manage the buildings it bought for close to $7.9 million in 2000.

"We want to put them for sale by the end of the year," said Carl Bond, director of real estate management for the SHDM, a paramunicipal organization that owns and manages affordable housing units, along with several commercial buildings.

"Those buildings will be sold, but we need an authorization from the (Department) of Finance."

Located at 977 Lucien l'Allier, and 1000-1006 de la Montagne St., south of René Lévesque Blvd., the buildings were initially slated to be demolished to make way for gleaming office towers.

They were to be the last part of the 3-million-square foot Parti Québécois-supported project that was later scrapped by the Liberal government in 2003.

The 24,000-square-foot site north of the Lucien l'Allier métro station was purchased from manufacturer H.L. Blachford Ltd. for $6.8 million in 2000 - far above the building's 2011 municipal evaluation of $4.5 million.

The disparity between the sales price and the current evaluation, an SHDM spokesperson explained, is because the land was to be used for a lucrative office tower, worth far more than a four-storey manufacturing plant.

The two buildings have taken a long time to come to market.

That's because Blachford had a lease at the building until this spring when it ceased operations, Bond said.

A travel agency is still operating at the building on de la Montagne, part of which is in a decrepit state.

What's more, the SHDM is now embroiled in legal talks with Blachford over the cost of cleaning up the building, which is contaminated.

"Right now the lawyers are talking and we're hoping to settle this out of court," Bond said.

But some commercial brokers say the SHDM lucked out in waiting.

The buildings, they said, would be ideal for residential development at a time when new condos are being constructed in record numbers and downtown land is selling at a premium.

"In terms of timing, it's better to go to the market today," said Louis Burgos, senior managing director, Cushman & Wakefield, Montreal.

Today, land in the downtown area is being sold for $250 to $350 per square foot, brokers say, depending on the level of building density, or how much can be developed overall on the site.

The SHDM's two buildings won't be coming to market alone. Another three sites have either traded hands, or are to come to market this year for development.

In late July, a site of Overdale Ave., an estimated 140,000-square-foot plot on the south side of René Lévesque Blvd, beside Bishop St., was sold by a company based out of a Sherbrooke St. West art gallery run by director Robert Landau for $28 million, provincial records show.

The buyer is a numbered company owned by investor Kheng Li, who is a partner of E. Khoury Construction Inc. A worker at Khoury who didn't want to be identified said the site could be used for either residential or office development.

And in April, Cadillac Fairview Corp. Ltd. announced a $400 million investment for an office and three condo towers to be built near the Bell Centre, on St. Antoine and de la Montagne Sts.

A fifth land site near the Bell Centre is to be put on the market next week, The Gazette has learned.

The price these sites will fetch will depend on a combination of zoning and market demand. The red-tape developers have historically faced in obtaining zoning changes to build higher - and more economically viable buildings - may be easier to deal with if the seller is a city agency, brokers say.