Calgary-based Ayrshire Group has acquired the former Shell Canada building in downtown Calgary for $92.5 million, purchasing the property from Cadillac Fairview after the office tower was leased in full to Canadian Natural Resources Ltd. under a new 15-year agreement.
The 683,000-square-foot building at 400 4th Ave. S.W. sold for about $135 per square foot, a figure Ayrshire president Graham Gooch said is well below the estimated cost of more than $600 per square foot to build a comparable property today. Gooch said the deal was less a wager on a broader recovery of downtown office real estate and more a targeted move to secure stable, long-term cash flow from a creditworthy tenant.
Competitive Bidding and Lease Strength
Gooch said the acquisition followed a competitive-bid process that drew more than 21 bids, mostly from private buyers along with some institutional investors. Ayrshire ultimately paid just over the asking price in a second round of bidding.
He pointed to the strength of CNRL’s lease as a central factor in the deal’s appeal, noting the company is among Canada’s 10 largest firms and one of the world’s largest energy producers, with a market capitalization of more than $140 billion. The landlord’s prior investment in tenant improvements to accommodate the energy company also factored into the purchase, he said.
Location and Transit Considerations
The building, which has stood in downtown Calgary since 1977, sits near the planned Green Line LRT expansion in the Eau Claire area. Gooch said the location offers transit advantages while sitting slightly outside the density of the central downtown core. He added that the property’s retail space and Plus 15 skybridge connections, totalling about 20,000 square feet, will matter given that CNRL has more than 2,000 employees based in the building. Those retail spaces are currently vacant, with Gooch saying Ayrshire plans to bring in a food concept to serve as an amenity for CNRL staff.
Ayrshire had largely stepped back from office investments in recent years, with this acquisition marking a return to the sector. Gooch said the company evaluates deals against its financing costs and other opportunities, and in this case the building’s capitalization rate was significantly higher than Ayrshire’s cost of debt. The lease also includes rental escalations intended to provide some protection against inflation.
Broader Investment Strategy
Gooch said Ayrshire sees real assets as a potential hedge in an inflationary environment and, as a private investment firm not tied to one asset class, is weighing opportunities across sectors. He said reallocating from public equity markets toward real assets with long-term cash flow and inflation-linked rental escalations represented what he described as a favourable risk-adjusted opportunity.
Gooch said it remains difficult to predict the trajectory of Calgary’s office market, but noted some positive signs, including ongoing office-to-other-use conversions and stronger performance among higher-grade A and AA buildings compared to B and C properties. He also pointed to what he characterized as growing momentum toward in-office work over remote work.
Ayrshire, which grew out of the private family office of ARC Financial co-founder Phil Swift, also holds another Calgary office property, Railway Street Corporate Centre, in the city’s south end. The firm said it continues to look for further office opportunities involving creditworthy tenants and long-term leases. Separately, the company has been advancing purpose-built rental housing projects in Calgary, including developments in the Beltline and East Village, as part of its Housing Impact Fund strategy aimed at adding affordable rental units in Alberta.
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