My bet would be a lease or purchase of some part of the Y that is for sale.
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Commercial Real Estate Discussion
- Thread starter hoggytime
- Start date
Bayview is considered "Centretown West". So could be.
Per Hoggytime, YMCA would make sense. Orleans Y was sold and now a climbing gym opened (or will open sometime soon).
Spoonsy
New Member
The Yard has a big "LEASED" sign on it, as of this week
Well, here is some news I didn't expect:
Ottawa Train Yards placed in receivership over owner's unpaid $39 million loan
The Ottawa Train Yards on Industrial Avenue in Ottawa. (Google images)
Josh Pringle
CTV News Ottawa Producer and Digital Lead
Follow |Contact
Published June 26, 2024 1:24 p.m. EDT
Share
One of Ottawa's largest shopping centres has been placed in receivership over an outstanding $39 million loan by the owner of the property.
The Ontario Superior Court of Justice appointed Grant Thornton Limited as receiver and manager of the assets of Ottawa Train Yards on Industrial Avenue.
Court documents on the Grant Thornton Limited website show Manulife (The Manufacturers Life Insurance Company) filed an application for Grant Thornton Limited(opens in a new tab) to be appointed the receiver of all assets after the owner failed to make payment on an outstanding loan.
141 Ontario is the owner of a portion of the Ottawa Train Yards shopping district, which has over 150 shops and services. Over the years, there have been several empty storefronts at Ottawa Train Yards, but stores remain open for business this week.
Manulife extended a $45.5 million loan to 141 Ontario. According to the court documents, the loan matured and was due on Feb. 1, 2024, but 141 Ontario failed to repay the loan upon maturity. As of March 21, 224, $39.4 million remains outstanding under the loan.
"141 Ontario has largely been non-responsive to Manulife’s repeated communications regarding the obligation to repay the Loan, both before and after the maturity date," says the documents. "141 Ontario has not engaged in any constructive communication with Manulife regarding its obligation to repay the Loan."
Manulife advised 141 Ontario in writing last August and November that it would not offer a renewal of the loan upon its maturity.
The documents show Manulife is 141 Ontario's major secured creditor.
"Manulife has lost confidence in 141 Ontario's willingness and ability to effectively manage, preserve and protect the Property, which constitutes Manulife's primary collateral for its very substantial Loan," says the court filing.
Grant Thornton was granted the Receivership Order on June 19.
According to Grant Thornton, it commenced "safeguarding and taking control of the real property" of 141 Ontario when the Receivership Order was issued.
"The Receiver has not been provided with any of the Companies’ books and records," the letter says.
"As such, the Receiver does not have the net book value of the Company’s assets, or a complete list of creditors. The Receiver continues to pursue the recovery of the Company’s books and records from 141 Ontario and Controlex Corporation."
Grant Thornton says there are two creditors who have registrations against the company and/or the land – Manulife and Bank of Montreal.
The Ontario Superior Court of Justice ruling to appoint a receiver states Grant Thornton is empowered and authorize to manage, operate and carry on the business of the debtor.
This is a developing story. CTV News Ottawa will have the latest as it becomes available
Ottawa Train Yards placed in receivership over owner's unpaid $39 million loan
Ottawa Train Yards placed in receivership over owner's unpaid $39 million loan
The Ottawa Train Yards on Industrial Avenue in Ottawa. (Google images)
Josh Pringle
CTV News Ottawa Producer and Digital Lead
Follow |Contact
Published June 26, 2024 1:24 p.m. EDT
Share
One of Ottawa's largest shopping centres has been placed in receivership over an outstanding $39 million loan by the owner of the property.
The Ontario Superior Court of Justice appointed Grant Thornton Limited as receiver and manager of the assets of Ottawa Train Yards on Industrial Avenue.
Court documents on the Grant Thornton Limited website show Manulife (The Manufacturers Life Insurance Company) filed an application for Grant Thornton Limited(opens in a new tab) to be appointed the receiver of all assets after the owner failed to make payment on an outstanding loan.
141 Ontario is the owner of a portion of the Ottawa Train Yards shopping district, which has over 150 shops and services. Over the years, there have been several empty storefronts at Ottawa Train Yards, but stores remain open for business this week.
Manulife extended a $45.5 million loan to 141 Ontario. According to the court documents, the loan matured and was due on Feb. 1, 2024, but 141 Ontario failed to repay the loan upon maturity. As of March 21, 224, $39.4 million remains outstanding under the loan.
"141 Ontario has largely been non-responsive to Manulife’s repeated communications regarding the obligation to repay the Loan, both before and after the maturity date," says the documents. "141 Ontario has not engaged in any constructive communication with Manulife regarding its obligation to repay the Loan."
Manulife advised 141 Ontario in writing last August and November that it would not offer a renewal of the loan upon its maturity.
The documents show Manulife is 141 Ontario's major secured creditor.
"Manulife has lost confidence in 141 Ontario's willingness and ability to effectively manage, preserve and protect the Property, which constitutes Manulife's primary collateral for its very substantial Loan," says the court filing.
Grant Thornton was granted the Receivership Order on June 19.
According to Grant Thornton, it commenced "safeguarding and taking control of the real property" of 141 Ontario when the Receivership Order was issued.
"The Receiver has not been provided with any of the Companies’ books and records," the letter says.
"As such, the Receiver does not have the net book value of the Company’s assets, or a complete list of creditors. The Receiver continues to pursue the recovery of the Company’s books and records from 141 Ontario and Controlex Corporation."
Grant Thornton says there are two creditors who have registrations against the company and/or the land – Manulife and Bank of Montreal.
The Ontario Superior Court of Justice ruling to appoint a receiver states Grant Thornton is empowered and authorize to manage, operate and carry on the business of the debtor.
This is a developing story. CTV News Ottawa will have the latest as it becomes available
From OBJ:
David Sali
The Ottawa Train Yards houses over 750,000 square feet of retail space covering over 110 acres of property.
The Ottawa Train Yards remains a “fantastic” site for retailers even as part of the shopping complex has been placed in receivership, a leading real estate broker says.
“It’s got a great tenant mix,” Jamie Boyce, a senior vice-president in CBRE’s Ottawa office who specializes in retail leasing, told OBJ on Thursday.
“I’m not sure what’s happened behind the scenes, but I would say that whatever is ongoing is an anomaly. I see no weakness in that particular roster of tenants and location.”
The Ontario Superior Court of Justice last week appointed Grant Thornton Limited as receiver and manager of the assets of a portion of the Ottawa Train Yards, which is located on Industrial Avenue west of St. Laurent Boulevard.
According to legal documents on the Grant Thornton Limited website, The Manufacturers Life Insurance Company (Manulife) filed an application for Grant Thornton to be appointed the receiver of all assets after the owner of a portion of the shopping complex failed to make payment on an outstanding loan.
141 Ontario is the owner of a 23.2-acre commercial site on the north side of Industrial Avenue. According to the court documents, Manulife extended a $45.5-million loan to 141 Ontario in December 2018 that matured and became payable on Feb. 1, 2024.
However, 141 Ontario failed to repay the loan upon maturity and, as of March 21, 2024, $39.5 million remained outstanding. The loan continues to accrue interest at the rate of $3,651 per day, the documents showed.
With more than 750,000 square feet of retail space, the Ottawa Train Yards is one of the city’s largest shopping malls. The complex is home to more than 150 retailers, services and restaurants.
But a number of the mall’s former tenants have closed up shop in the past couple of years, including fashion retailer Nordstrom Rack, housewares chain Bed Bath & Beyond and children’s furniture store buybuy Baby. Those spaces remain vacant.
Still, Boyce says the Train Yards’ tenant roster is “very solid” despite the exodus of some big-name retailers, adding the mall “remains a highly desirable location geographically and comparatively” to other similar shopping complexes in Ottawa.
“I know there are tenants that are interested in being there for sure,” he said.
Analysts say the Ottawa retail market remains healthy as available real estate continues to be hard to find and sales keep rising.
A report earlier this year from brokerage firm Marcus & Millichap said Ottawa’s retail vacancy rate hit an all-time low in 2023. The firm predicted the rate will fall another tenth of a percentage point to about 1.5 per cent this year, “making Ottawa one of the tightest retail markets in 2024.”
While some industry observers are forecasting a slowdown in overall retail sales growth this year, Boyce said Ottawa is “still undersupplied” when it comes to large, outdoor suburban shopping complexes.
Often referred to as “power centres,” such properties in the National Capital Region include Barrhaven’s Chapman Mills Marketplace, Nepean’s College Square mall and Kanata Centrum Shopping Centre.
“Those are all landmark retail locations that Train Yards would compare with,” Boyce explained, adding “those properties are very, very well occupied with very little vacancy.”
A lack of new construction has magnified the problem as developers put major developments on hold when the Bank of Canada hiked interest rates in an effort to smother inflation, analysts say.
Just 90,000 square feet of new space was added to Ottawa’s retail inventory last year, according to CBRE, and the firm is projecting no new developments to come online before the end of 2024.
Boyce said the lack of new retail builds in Ottawa “is consistent with major markets across Canada.”
But construction activity could start to pick up again if the Bank of Canada follows up its recent rate cut with more reductions over the next 12 to 24 months, he added.
“It’s just very expensive to build,” Boyce said. “For a developer or retailer to build and occupy, they need to have an exceptional sales (forecast).”
‘No weakness’ in Ottawa Train Yards’ tenants or location, veteran retail broker says
The Ottawa Train Yards houses over 750,000 square feet of retail space covering over 110 acres of property.
The Ottawa Train Yards remains a “fantastic” site for retailers even as part of the shopping complex has been placed in receivership, a leading real estate broker says.
“It’s got a great tenant mix,” Jamie Boyce, a senior vice-president in CBRE’s Ottawa office who specializes in retail leasing, told OBJ on Thursday.
“I’m not sure what’s happened behind the scenes, but I would say that whatever is ongoing is an anomaly. I see no weakness in that particular roster of tenants and location.”
The Ontario Superior Court of Justice last week appointed Grant Thornton Limited as receiver and manager of the assets of a portion of the Ottawa Train Yards, which is located on Industrial Avenue west of St. Laurent Boulevard.
According to legal documents on the Grant Thornton Limited website, The Manufacturers Life Insurance Company (Manulife) filed an application for Grant Thornton to be appointed the receiver of all assets after the owner of a portion of the shopping complex failed to make payment on an outstanding loan.
141 Ontario is the owner of a 23.2-acre commercial site on the north side of Industrial Avenue. According to the court documents, Manulife extended a $45.5-million loan to 141 Ontario in December 2018 that matured and became payable on Feb. 1, 2024.
However, 141 Ontario failed to repay the loan upon maturity and, as of March 21, 2024, $39.5 million remained outstanding. The loan continues to accrue interest at the rate of $3,651 per day, the documents showed.
With more than 750,000 square feet of retail space, the Ottawa Train Yards is one of the city’s largest shopping malls. The complex is home to more than 150 retailers, services and restaurants.
But a number of the mall’s former tenants have closed up shop in the past couple of years, including fashion retailer Nordstrom Rack, housewares chain Bed Bath & Beyond and children’s furniture store buybuy Baby. Those spaces remain vacant.
Still, Boyce says the Train Yards’ tenant roster is “very solid” despite the exodus of some big-name retailers, adding the mall “remains a highly desirable location geographically and comparatively” to other similar shopping complexes in Ottawa.
“I know there are tenants that are interested in being there for sure,” he said.
Analysts say the Ottawa retail market remains healthy as available real estate continues to be hard to find and sales keep rising.
A report earlier this year from brokerage firm Marcus & Millichap said Ottawa’s retail vacancy rate hit an all-time low in 2023. The firm predicted the rate will fall another tenth of a percentage point to about 1.5 per cent this year, “making Ottawa one of the tightest retail markets in 2024.”
While some industry observers are forecasting a slowdown in overall retail sales growth this year, Boyce said Ottawa is “still undersupplied” when it comes to large, outdoor suburban shopping complexes.
Often referred to as “power centres,” such properties in the National Capital Region include Barrhaven’s Chapman Mills Marketplace, Nepean’s College Square mall and Kanata Centrum Shopping Centre.
“Those are all landmark retail locations that Train Yards would compare with,” Boyce explained, adding “those properties are very, very well occupied with very little vacancy.”
A lack of new construction has magnified the problem as developers put major developments on hold when the Bank of Canada hiked interest rates in an effort to smother inflation, analysts say.
Just 90,000 square feet of new space was added to Ottawa’s retail inventory last year, according to CBRE, and the firm is projecting no new developments to come online before the end of 2024.
Boyce said the lack of new retail builds in Ottawa “is consistent with major markets across Canada.”
But construction activity could start to pick up again if the Bank of Canada follows up its recent rate cut with more reductions over the next 12 to 24 months, he added.
“It’s just very expensive to build,” Boyce said. “For a developer or retailer to build and occupy, they need to have an exceptional sales (forecast).”
From OBJ:
David Sali
Nordstrom vacated its two-level, 157,000-square-foot space in the Rideau Centre in mid-2023. File photo
Several marquee retailers are eyeing the former Nordstrom department store space at the Rideau Centre, a prominent local real estate broker says – but it will likely be at least a couple of years yet before any new occupants are open for business.
Candice Lerner-Fry, head of the retail leasing division at Marcus & Millichap, says Rideau Centre owner Cadillac Fairview is in talks with major fashion and household merchandise brands that are looking at renting some of the two-storey, 157,000-square-foot space formerly occupied by the Seattle-based retail giant, which pulled out of the downtown mall more than a year ago.
“They’re all big names,” Lerner-Fry said of the potential new tenants, adding there’s enough interest in the vacant real estate that filling all of it likely won’t be a problem.
“I don’t know which way (Cadillac Fairview is) going to lean,” she added. “It will all depend on dollars and cents.”
But regardless of who ends up taking over the former department store site, curious consumers will probably have to wait a while before they can check out Nordstrom’s replacements.
The site will likely be subdivided to accommodate more than one new tenant, Lerner-Fry noted, and the renovation process likely won’t begin until deals are signed.
This week, Cadillac Fairview told the veteran broker the space probably won’t get backfilled until at least the summer of 2026.
“It’s just the time that it takes to do such a big (conversion) from one retailer to multiple retailers,” Lerner-Fry explained.
Cadillac Fairview has been tight-lipped about what might replace Nordstrom and did not reply to a request for comment from OBJ this week.
But Toronto-based retail analyst Bruce Winder said the commercial real estate giant’s other malls across Canada that also lost the U.S.-based department store as a tenant could offer some clues.
At the Eaton Centre in downtown Toronto, for example, Cadillac Fairview is replacing Nordstrom with three new tenants: Quebec-based department store Simons, local Italian restaurant chain Eataly, and the Nike Store, which relocated from another part of the mall into a “much larger and more experiential” space, Winder noted.
However, the tenant mix in Ottawa will almost certainly be different. Simons is already firmly entrenched in the Rideau Centre, occupying 100,000 square feet of space over several floors in the eastern portion of the mall. Nike also opened a store in the shopping centre just a few years ago.
But there are plenty of other retailers catering to upscale shoppers such as those coveted by Simons and the like that might be interested in moving in, Winder noted in an interview on Thursday afternoon.
“There are all kinds of opportunities out there – everything from premium car dealerships to new entrants into Canada from Europe or Asia that want to build a presence,” he said. “Anything goes these days. Landlords are just looking for tenants who’ll bring people into the mall, pay the rent and drive sales.”
Downtown malls such as the Rideau Centre have “skewed toward premium brands” in recent years in an effort to generate more revenue per square foot, and that trend will likely continue when the new tenants for the Nordstrom space are unveiled, he added.
“It’s a lot easier to make the numbers work when you’re selling a high-end product,” Winder said. “Your average ticket is very high, whereas you have to sell a lot of a low-priced item to make the math work to pay the rent. I wouldn’t be surprised to see some fairly premium, affluent brands take over some of that space.”
And as Lerner-Fry suggested, Winder said it’s a good bet it will require multiple tenants to fill the hole left by Nordstrom’s departure.
“It probably won’t be one retailer who takes the whole space. It’s just too big a footprint.”
Former Nordstrom space in Rideau Centre not likely to be occupied until 2026, broker says
'Big names' in fashion and consumer goods in talks to occupy 157,000-square-foot space vacated by U.S. department store chain in 2023
- August 29, 2024
- 4:05 PM
- ET
Nordstrom vacated its two-level, 157,000-square-foot space in the Rideau Centre in mid-2023. File photo
Several marquee retailers are eyeing the former Nordstrom department store space at the Rideau Centre, a prominent local real estate broker says – but it will likely be at least a couple of years yet before any new occupants are open for business.
Candice Lerner-Fry, head of the retail leasing division at Marcus & Millichap, says Rideau Centre owner Cadillac Fairview is in talks with major fashion and household merchandise brands that are looking at renting some of the two-storey, 157,000-square-foot space formerly occupied by the Seattle-based retail giant, which pulled out of the downtown mall more than a year ago.
“They’re all big names,” Lerner-Fry said of the potential new tenants, adding there’s enough interest in the vacant real estate that filling all of it likely won’t be a problem.
“I don’t know which way (Cadillac Fairview is) going to lean,” she added. “It will all depend on dollars and cents.”
But regardless of who ends up taking over the former department store site, curious consumers will probably have to wait a while before they can check out Nordstrom’s replacements.
The site will likely be subdivided to accommodate more than one new tenant, Lerner-Fry noted, and the renovation process likely won’t begin until deals are signed.
This week, Cadillac Fairview told the veteran broker the space probably won’t get backfilled until at least the summer of 2026.
“It’s just the time that it takes to do such a big (conversion) from one retailer to multiple retailers,” Lerner-Fry explained.
Cadillac Fairview has been tight-lipped about what might replace Nordstrom and did not reply to a request for comment from OBJ this week.
But Toronto-based retail analyst Bruce Winder said the commercial real estate giant’s other malls across Canada that also lost the U.S.-based department store as a tenant could offer some clues.
At the Eaton Centre in downtown Toronto, for example, Cadillac Fairview is replacing Nordstrom with three new tenants: Quebec-based department store Simons, local Italian restaurant chain Eataly, and the Nike Store, which relocated from another part of the mall into a “much larger and more experiential” space, Winder noted.
However, the tenant mix in Ottawa will almost certainly be different. Simons is already firmly entrenched in the Rideau Centre, occupying 100,000 square feet of space over several floors in the eastern portion of the mall. Nike also opened a store in the shopping centre just a few years ago.
But there are plenty of other retailers catering to upscale shoppers such as those coveted by Simons and the like that might be interested in moving in, Winder noted in an interview on Thursday afternoon.
“There are all kinds of opportunities out there – everything from premium car dealerships to new entrants into Canada from Europe or Asia that want to build a presence,” he said. “Anything goes these days. Landlords are just looking for tenants who’ll bring people into the mall, pay the rent and drive sales.”
Downtown malls such as the Rideau Centre have “skewed toward premium brands” in recent years in an effort to generate more revenue per square foot, and that trend will likely continue when the new tenants for the Nordstrom space are unveiled, he added.
“It’s a lot easier to make the numbers work when you’re selling a high-end product,” Winder said. “Your average ticket is very high, whereas you have to sell a lot of a low-priced item to make the math work to pay the rent. I wouldn’t be surprised to see some fairly premium, affluent brands take over some of that space.”
And as Lerner-Fry suggested, Winder said it’s a good bet it will require multiple tenants to fill the hole left by Nordstrom’s departure.
“It probably won’t be one retailer who takes the whole space. It’s just too big a footprint.”
Doesn't sound like we'll get that Convention Centre expansion, unfortunately.
casscadia
New Member
I still think they should put a cinema there. Definitely wouldn't be a fan of a car dealership though.
They have the actual abandoned cinema still up on the fourth floor, unless Imaginaire took a small slice of it.
From RenX Today:
Jessica Whiting Associate Vice President, Colliers Ottawa Brokerage
The model suite built on spec at 275 Slater Street, Suite 404 represented by Jessica Whiting, leased in Q3-24. Photo provided by Colliers Canada.
What is the current direction of Ottawa’s office market, and how does it compare to other major Canadian cities?
In Q2 of 2024, Ottawa’s office market continued to show a mixed and gradual improvement. At 11.5 per cent, Ottawa’s office vacancy has decreased for the fourth consecutive quarter and is currently the third lowest in Canada, following Victoria and Vancouver.
Ottawa’s reduction in office vacancy is driven by positive net absorption, in both the downtown and suburban markets. However, the city’s return-to-office rate remains low compared to other major cities. At the end of Q2 2024, Ottawa’s office market was operating at 73 per cent of its pre-COVID occupancy levels, compared to Toronto at 89 per cent, and Vancouver and Montreal at 77 per cent.
Despite a slower return-to-office, the Ottawa market is showing positive signs in leasing activity as downtown occupancy levels continue to trend upward. At the end of 2023, occupancy in the downtown core was reported at 36 per cent; it has jumped significantly to 62 per cent over the past two quarters.
How do trends differ in Ottawa’s downtown office market and suburban office market?
Ottawa’s downtown and suburban office markets have both experienced significant change. The downtown office market continues to experience a strong demand for well-located, quality office spaces, and is seeing an increase in leasing activity as tenants execute post-pandemic accommodation plans. Vacancy rates in the downtown area have declined to 10.7 per cent as a result of positive net absorption of 93,438 square feet.
Similar to the downtown core, vacancy in the suburban office market is at 12.1 per cent after dropping by 51 basis points. This change occurred due to positive net absorption of 117,044 square feet, particularly in the western and southern ends of Ottawa. The market has benefited from companies seeking to decentralize their operations, choosing suburban locations that offer cost savings and accommodate hybrid work models.
What unique requirements are being sought by Ottawa office tenants?
As hybrid work models remain prominent, tenants are prioritizing office spaces that can accommodate flexible layouts. These requirements include smaller, decentralized offices, collaborative spaces, and areas that can be easily reconfigured. Additionally, proximity to public transit and major roadways remains a priority for businesses and tenants, as they are looking for easily accessible locations to help improve work-life balance for employees.
Modern tenants often require office spaces that are fully equipped with the latest technology, including robust internet infrastructure, SMART building systems and enhanced security measures. For government and tech sector tenants – the two major tenant groups in Ottawa – these amenities are particularly important. In addition, growing emphasis on Environmental, Social and Governance (ESG) performance has led tenants to seek energy-efficient buildings with green certifications, including LEED.
What does the tenant profile generally look like in Ottawa’s office market? How has the profile changed over the past five years?
In 2024, Ottawa’s office market tenant profile is characterized by three major sectors: government, technology and professional services. The federal government remains the largest tenant in Ottawa, occupying a significant portion of the downtown core.
Government offices are typically housed in Class A buildings with stringent security requirements, and preferably ones that are energy-efficient and sustainable. As a major tenant in this market, government institutions provide a stable foundation with long-term leases.
The tech industry in Ottawa, particularly the Kanata area (known as Silicon Valley North), continues to grow due to both startups and established firms. This sector favours modern, flexible office spaces that support innovation, collaboration and hybrid work models. Consequently, office spaces have advanced technological infrastructure, high-speed internet and amenities that promote employee well-being.
Professional services include law firms, consulting companies, financial services and other corporate offices. These tenants typically prefer smaller spaces in both downtown and suburban areas that offer prime accessibility and prestige.
What changes are you seeing in the federal government’s approach to office leasing?
The federal government’s shift towards a more permanent hybrid work model for public sector employees in 2024 is expected to significantly impact Ottawa’s office market.
Demand for more adaptable office spaces is predicted to grow as the government will require offices that can support hybrid work environments and collaborative spaces. Increased demand may shift how office spaces are designed and marketed in Ottawa. Furthermore, there will likely be a move to decentralize some government offices to suburban locations, to be closer to where employees live and accommodate hybrid work needs.
What challenges are tenants facing when looking for office space in the Ottawa market?
Tenants in Ottawa are demonstrating the “flight-to-quality” trend that has increased competition for Class A buildings with strong ESG credentials. The limited supply of such spaces has created challenges for tenants looking to lease top-tier office spaces.
As the demand for premium facilities increases, so do rental rates. Tenants are facing higher costs when trying to win spaces in high-quality buildings. Some are compromising on location when their budget does not align with Class A options. With the limited supply of Class A office spaces in Ottawa, particularly in prime locations like the downtown core, and with development timelines of new Class A options further out, some tenants are opting for short-term leases in Class B and C buildings.
How does your expertise in office tenant and landlord representation in Ottawa help your clients?
Tracking the posted net rate of buildings is just the tip of the iceberg. It is important to understand the market trends and motivations for landlords and tenants, to know what incentives to push on. In office leasing, we set up the tenants and landlords for long-term relationships, and this requires having knowledge of the buildings, how they are managed and how they are maintained.
More than ever, landlords need the best exposure for their buildings. Turnkey model suites that target specific business types are essential to not only tenants, but to the brokerage community as well.
I pride myself on being very knowledgeable on which tenants and brokers are currently active in the market. I take calculated risks, do extensive research and apply years of expertise in the market, which has led to many successful leasing transactions for landlord clients.
Ottawa's office market is on a new trajectory
Ask The Experts: Jessica Whiting, Associate Vice President, Colliers Ottawa Brokerage
Jessica Whiting Associate Vice President, Colliers Ottawa Brokerage
The model suite built on spec at 275 Slater Street, Suite 404 represented by Jessica Whiting, leased in Q3-24. Photo provided by Colliers Canada.
What is the current direction of Ottawa’s office market, and how does it compare to other major Canadian cities?
In Q2 of 2024, Ottawa’s office market continued to show a mixed and gradual improvement. At 11.5 per cent, Ottawa’s office vacancy has decreased for the fourth consecutive quarter and is currently the third lowest in Canada, following Victoria and Vancouver.
Ottawa’s reduction in office vacancy is driven by positive net absorption, in both the downtown and suburban markets. However, the city’s return-to-office rate remains low compared to other major cities. At the end of Q2 2024, Ottawa’s office market was operating at 73 per cent of its pre-COVID occupancy levels, compared to Toronto at 89 per cent, and Vancouver and Montreal at 77 per cent.
Despite a slower return-to-office, the Ottawa market is showing positive signs in leasing activity as downtown occupancy levels continue to trend upward. At the end of 2023, occupancy in the downtown core was reported at 36 per cent; it has jumped significantly to 62 per cent over the past two quarters.
How do trends differ in Ottawa’s downtown office market and suburban office market?
Ottawa’s downtown and suburban office markets have both experienced significant change. The downtown office market continues to experience a strong demand for well-located, quality office spaces, and is seeing an increase in leasing activity as tenants execute post-pandemic accommodation plans. Vacancy rates in the downtown area have declined to 10.7 per cent as a result of positive net absorption of 93,438 square feet.
Similar to the downtown core, vacancy in the suburban office market is at 12.1 per cent after dropping by 51 basis points. This change occurred due to positive net absorption of 117,044 square feet, particularly in the western and southern ends of Ottawa. The market has benefited from companies seeking to decentralize their operations, choosing suburban locations that offer cost savings and accommodate hybrid work models.
What unique requirements are being sought by Ottawa office tenants?
As hybrid work models remain prominent, tenants are prioritizing office spaces that can accommodate flexible layouts. These requirements include smaller, decentralized offices, collaborative spaces, and areas that can be easily reconfigured. Additionally, proximity to public transit and major roadways remains a priority for businesses and tenants, as they are looking for easily accessible locations to help improve work-life balance for employees.
Modern tenants often require office spaces that are fully equipped with the latest technology, including robust internet infrastructure, SMART building systems and enhanced security measures. For government and tech sector tenants – the two major tenant groups in Ottawa – these amenities are particularly important. In addition, growing emphasis on Environmental, Social and Governance (ESG) performance has led tenants to seek energy-efficient buildings with green certifications, including LEED.
What does the tenant profile generally look like in Ottawa’s office market? How has the profile changed over the past five years?
In 2024, Ottawa’s office market tenant profile is characterized by three major sectors: government, technology and professional services. The federal government remains the largest tenant in Ottawa, occupying a significant portion of the downtown core.
Government offices are typically housed in Class A buildings with stringent security requirements, and preferably ones that are energy-efficient and sustainable. As a major tenant in this market, government institutions provide a stable foundation with long-term leases.
The tech industry in Ottawa, particularly the Kanata area (known as Silicon Valley North), continues to grow due to both startups and established firms. This sector favours modern, flexible office spaces that support innovation, collaboration and hybrid work models. Consequently, office spaces have advanced technological infrastructure, high-speed internet and amenities that promote employee well-being.
Professional services include law firms, consulting companies, financial services and other corporate offices. These tenants typically prefer smaller spaces in both downtown and suburban areas that offer prime accessibility and prestige.
What changes are you seeing in the federal government’s approach to office leasing?
The federal government’s shift towards a more permanent hybrid work model for public sector employees in 2024 is expected to significantly impact Ottawa’s office market.
Demand for more adaptable office spaces is predicted to grow as the government will require offices that can support hybrid work environments and collaborative spaces. Increased demand may shift how office spaces are designed and marketed in Ottawa. Furthermore, there will likely be a move to decentralize some government offices to suburban locations, to be closer to where employees live and accommodate hybrid work needs.
What challenges are tenants facing when looking for office space in the Ottawa market?
Tenants in Ottawa are demonstrating the “flight-to-quality” trend that has increased competition for Class A buildings with strong ESG credentials. The limited supply of such spaces has created challenges for tenants looking to lease top-tier office spaces.
As the demand for premium facilities increases, so do rental rates. Tenants are facing higher costs when trying to win spaces in high-quality buildings. Some are compromising on location when their budget does not align with Class A options. With the limited supply of Class A office spaces in Ottawa, particularly in prime locations like the downtown core, and with development timelines of new Class A options further out, some tenants are opting for short-term leases in Class B and C buildings.
How does your expertise in office tenant and landlord representation in Ottawa help your clients?
Tracking the posted net rate of buildings is just the tip of the iceberg. It is important to understand the market trends and motivations for landlords and tenants, to know what incentives to push on. In office leasing, we set up the tenants and landlords for long-term relationships, and this requires having knowledge of the buildings, how they are managed and how they are maintained.
More than ever, landlords need the best exposure for their buildings. Turnkey model suites that target specific business types are essential to not only tenants, but to the brokerage community as well.
I pride myself on being very knowledgeable on which tenants and brokers are currently active in the market. I take calculated risks, do extensive research and apply years of expertise in the market, which has led to many successful leasing transactions for landlord clients.
Ottawa no longer the ‘holy grail’ for institutional office investors, brokers say, as 150 Slater put up for sale – Ottawa Business Journal
Another marquee downtown office tower is up for sale as some real estate brokers say Ottawa is losing its lustre for institutional investors amid ongoing
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