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Nortel’s Shrinking Real Estate Empire
By Mark Evans | June 10, 2008
As Nortel moves to re-size itself to lower operating costs and create competitive cost structure, it has been interesting to see how the company’s real estate footprint in North America is shrinking.
Nortel recently announced it will close a 59-acre campus in Calgary where it operates a 400-person R&D facility, which was built in the 1990s for $300-million. Now, the company has sold a four-building, 74,300 square meter office facility in Montreal called St. Laurent Technoparc.
According to the Montreal Gazette, Nortel created the R&D, assembly and wireless equipment testing facility in the 1990s but when the telecom boom ended it reduced its real estate needs by 75%, and then tried to rent the rest. Last year, Nortel threw in the towel by seeking bids for all four buildings.
The eventual winner was a partnership of Belmont Equity Partners and Brookfield Real Estate Opportunity Fund. After initially thinking it could take several years to find tenants for the 46,500 sq. meters of unoccupied office and industrial space, the new owners have already sold out the entire facility, which is now known as Place Innovation. Current tenants include Nortel, Bombardier, Alcatel-Lucent and CAE.
“We look for under-performing properties in more than 30 cities in North America, including Toronto and Montreal, where a more entrepreneurial and professional approach to management and leasing can yield very favourable results,” Seamus Foran, senior vice-president, Brookfield Real Estate Opportunity Fund, told the Gazette. “Place Innovation sits on a large area and the equity investment required was significant, but it was a terrific development opportunity and worth all the time and resources we committed.”
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