FREDERICTON – There hasn’t been a new building with “Class A” commercial office space in more than 20 years in downtown Fredericton. Now there could be two with another new major development on the horizon.
Kileel Developments Inc. is planning to construct a building with up to 75,000 square feet of office space at the corner of King Street and Westmorland Street. The company is currently negotiating with potential tenants and needs commitments to fill 75 per cent of the space to proceed with the development.
Originally, John Kileel, president of Kileel Investments, says they were planning to construct a five-storey office building, as shown in the most current draft design. They are now looking at a mixed-use project with up to seven floors of apartments (20-24 units) to tap into the growing need for downtown housing.
There have been three new apartment buildings in the downtown area in the last two years, says Kileel, and many more such developments are in the works.
“There’s [actually] a much stronger demand for apartments downtown than office space,” he said. “There’s definitely a growing market for downtown apartments, absolutely – at both ends of the market. [There are] the younger millennials, young professionals that are looking to live downtown but also some of the older market – the baby boomers that are looking to sell their house and move into an apartment in the downtown area.”
It is the second proposed office development made public in the last month. In late January, Ross Ventures announced that it had secured an anchor tenant for a new office building on Carleton Street in downtown Fredericton.
Kileel has decades of experience with commercial and residential developments in the Fredericton area. The company was the developer of Frederick Square, the Sheraton Hotel (now the Delta Hotels by Marriott) on the waterfront, and townhouse and condo developments on the north and south sides of the city.
He said this development was originally supposed to happen a decade ago but it was shelved because of market conditions at the time. They had an anchor tenant in place in 2008 but the company had to withdraw because of the global financial crisis. “Bank financing dried up for a year,” said Kileel.
The project was then delayed by the growth of Knowledge Park, he says, which attracted most of the new office development in the last decade.
“We had a study done by Turner Drake and the growth was bigger uptown than it was downtown,” said Kileel. “That was mostly due to Knowledge Park. That potential growth could have been downtown but … most of the growth went up there.”
Kileel says priorities are now shifting back downtown for both the residential and commercial markets.
“The buildings [in Knowledge Park] are at capacity,” he said. “There is more land to develop. [But] I understand from the city’s perspective that there isn’t much of an appetite to build any more up there … They want to turn their focus to the downtown.”
There is enough demand for both the new Ross building and the Kileel one, he says, because there hasn’t been a new development downtown with “Class A” space in such a long time. The Kileel building will be LEED (Leadership in Energy and Environmental Design) certified and have an inside connection to the Frederick Square parking garage.
“There was a market for Class A space in the downtown area because there hasn’t been a new building with class A space for more than 20 years,” said Kileel, who says they began the planning process more than a year ago.
“A lot of existing tenants were looking for growth opportunities. They didn’t have the room to grow in the space they were in or they weren’t for whatever reason happy in their current locations. So they were looking to move. So there was an opportunity to pick up some unsatisfied tenants.”
Kileel says they plan to make a final decision soon and begin construction in the summer if they decide to proceed. The projected would be completed within two years.
“We’re going to make a commitment one way or another in the next couple of months,” he said. “Either we’re going to put it on the shelf or we’re going ahead.”