London diplomatic office worth $600M
Randy Boswell, Canwest News Service
Tuesday, December 17, 2008
The federal government is getting rid of one of the country's prized foreign properties - a palatial British building named after Canada's first prime minister.
The government has formally launched its bid to unload the eight-storey, $600-million Macdonald House in downtown London, as part of a real estate exchange to "unlock the value" of the historic mansion and to "improve operational efficiencies" at the Canadian High Commission.
The proposed property switch does not include the country's flagship building in Britain, Canada House on Trafalgar Square. However, it would see the 135,000-sq.-ft. (41,148 square-metre) Macdonald House - the main work site for Canada's 150 London-based diplomats and the official residence of High Commissioner James Wright - redeveloped as a prime commercial or residential block on Grosvenor Square in the city's upscale Mayfair district.
In exchange, the High Commission would acquire a new, modern chancery building closer to Canada House.
"The official residence, as part of the Macdonald House property, would be included in an exchange of Macdonald House," a Foreign Affairs spokesman told Canwest News Service. "A new official residence would be included within the confines of a new chancery building."
Macdonald House, built just before the Second World War, originally served as the U.S. Embassy. Canada acquired the building in 1959 - and renamed it to honour the country's first prime minister, Sir John A. Macdonald - after the Americans moved their embassy to its current site, also on Grosvenor Square.
Last year, the U.S. sold its London naval building on the same square for more than $500 million to a British retail developer.
Foreign Affairs has shortlisted three potential partners in the deal and is now assessing several proposals with an aim of finalizing the relocation plan within six months. The possible locations of the new Canadian diplomatic site have not been disclosed.
"Macdonald House has become too large for our requirements, and is not conveniently near Canada House," the spokesman stated. "It is also in need of extensive modernization. Located in the highly desirable Mayfair area of London, an exchange of this property with another will allow us to unlock the value of its present site while providing a better building in proximity to Canada House, Whitehall (and) Westminster."
Last week, the London real estate magazine Property Week reported that British developer Exemplar Properties had been selected to partner with the High Commission in carrying out the plan. Foreign Affairs denied the report but acknowledged that the process of moving out of Macdonald House has begun: "We have received proposals from three shortlisted proponents and are continuing the evaluation of their proposals. We are at the start of a long business process. Any decisions made will be supported by a sound business case and will be subject to government approval."
A 2006 audit of the High Commission's operations in London identified the division of diplomatic activities between two main buildings as a major obstacle: "Employees are located in two chanceries, Macdonald House and Canada House, which are configured in a way which restricts program integration," the audit stated.
Canada's plan to move out of Macdonald House took shape in 2007 as part of a wider, government-ordered review of hundreds of federally-owned diplomatic properties - potentially worth billions of dollars - located around the world. The most controversial proposal involved the sale of the palatial, $24-million Strathmore residence near Dublin, the home of Canada's ambassador to Ireland for the past 50 years.
© Canwest News Service 2008
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