Why CBC may have to sell its headquarters to survive by Tony Wong
Jun 26, 2014
The broadcaster may be forced to sell its downtown Toronto headquarters in the face of budget cuts.
Source: Toronto Star
Will the CBC be forced to sell its iconic downtown Toronto headquarters in the wake of budget cuts?
The cash-strapped public broadcaster is at a crossroads and needs to cut costs dramatically as it announces its five-year strategic plan to employees on Thursday.
The 1.4-million-square-foot headquarters at Front and John Sts. is considered prime Canadian real estate.
“We can’t invest in infrastructure that drags us down. We can’t invest our money in bricks and mortar. We have to invest in content,” CBC President Hubert Lacroix may have hinted in a video release Wednesday in anticipation of Thursday’s town hall meeting.
In 2012, Lacroix also said he hoped to reduce the CBC’s real estate footprint by 800,000 square feet through leasing and sales of properties it owns.
Lacroix said he didn’t believe in “being the owner of buildings,” but at the time resisted putting CBC headquarters — which is valued at hundreds of millions of dollars — on the auction block.
But the financial picture has not improved since then.
Funding and advertising shortfalls means that CBC/Radio Canada is cutting $130 million from its budget this year, resulting in 657 job losses.
The five-year strategic plan will have to deal with the daunting fiscal reality. And management seems to be preparing employees for more bad news.
“Our biggest challenge is that the business is not sustainable as it’s currently structured. We have lower revenues than we do costs so a transformation is necessary from a financial sustainability point of view,” said Heather Conway, head of English services for the corporation, on Wednesday.
“It’s impossible to engage in strategic thinking without factoring in our financial situation,” echoed Lacroix.
Through downsizing over the years, the building has rarely been fully occupied and is about one-third empty.
“It’s a very good market if you’re a seller, but it will get tougher for those leasing properties moving forward,” says Stuart Barron, national director of research at Cushman & Wakefield.
If the CBC puts the building on the market, it will likely attract the attention of big investors and pension funds that have made it a seller’s market for prime commercial real estate.
Leasing the empty parts of the building would likely be a less attractive option because of higher vacancy rates in the downtown core.
Cushman & Wakefield Ltd. estimates that downtown vacancy rates will jump to above 10 per cent over the next year compared with the current 5.5 per cent.