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The conversion of Calgary’s historic Barron Building from an office to a residential building is expected to cost the developer more than double the originally estimated amount due to significant complications during construction, according to its CEO.

The “complicated and unusual project” has led the developer to submit several amendments for city approval, Strategic Group CEO Riaz Mamdani said in an interview with Postmedia. Most of Strategic’s contractors have been paid for their work, though issues remain to be resolved with some.

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The disruption and cost increases are obstacles to the city’s high-profile efforts to convert office buildings into housing, but Mamdani said the Barron building conversion is unique in its complexity and difficulty.

“I didn’t realize the complexity of this particular renovation… but we’re going to get it done,” said the successful real estate mogul.

Considered the birthplace of Canada’s oil industry, the building was constructed in the early 1950s following the discovery of one of Alberta’s first major crude oil deposits. Due to the outdated building plans, Strategic Group was less informed about the building’s specific features when planning the project than it would have been with newer buildings. Those plans – coupled with ambitious changes to the building, such as widening the elevator and building an underground parking garage – presented challenges to the structural engineers at every turn.

According to Mamdani, the initial cost of the reconstruction was $50 to $55 million. That figure has now risen to $115 million. Construction will resume in 45 to 60 days, subject to approval by the city.

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Due to the delays, the building’s planned opening date will be pushed back to the end of 2026, after originally being scheduled for 2024.

By mid-April, one of the contractors hired for the remodel was owed $327,000 for not being paid between late November 2023 and early March 2024. Kyle Lucas, vice president of operations at Con-Forte, said at the time that the concrete company was “sitting on the hook” while Strategic restructured its operations.

Con-Forte declined to comment on the status of its contract with Strategic.

“The majority” of Strategic’s contractors have been paid, Mamdani said, and will continue working while the site is reopened. However, some contractors will need to be negotiated “through lawyers and perhaps through the court process,” Mamdani said.

City funds for reconstruction will only be paid out after completion

Although the City of Calgary has committed to contributing a total of $8.5 million, these funds will not be disbursed to the Strategic Group until the renovation is completed and the City has issued a building permit.

The city’s agreement is unrelated to Calgary’s $153 million office-to-housing conversion program, which is designed to fund 17 different projects. All $153 million of that program is earmarked for conversion projects, which is why the city suspended it last fall.

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Strategic made a handful of “value engineering” changes to adjust the design plans, but most of the changes would not be noticeable to the naked eye and some changes were focused on the non-historic exterior components of the Barron Building.

Once construction is complete, the remodeled Barron Building will house 118 residential rental units and 8,000 square feet of retail space.

The developer has undertaken several redevelopment projects, which are notoriously more expensive and challenging than new construction. Strategic oversaw the Cube redevelopment in Calgary’s Beltline district on 11 Avenue SW and a redevelopment in downtown Edmonton.

Despite extensive experience in the field of retrofitting, Mamdani said the Barron project was an unprecedented challenge.

“The level of complexity and the number of things that didn’t go according to plan surprises me, because statistically, 50 percent of your news should be bad news and 50 percent of your news should be good news,” Mamdani said.

“Sometimes we find it difficult to find the good, but we are excited. We are confident that this project is not doomed to failure.”

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X: @mattscace67

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