The Queensway Corporate Campus, which overlooks the north side Highway 417 between St. Laurent Boulevard and Cyrville Road, was sold by Great-West Life and London Life for $56.8 million.
The property was picked up by a branch of the Canadian Forces known as “non-public property,” which operates like a trust to support the morale, welfare, community and recreation programs for military personnel and their families.
The Queensway Corporate Campus was the last of GWL’s suburban class-A offices in Ottawa, says Nathan Smith, the senior vice-president of Cushman & Wakefield’s capital market group who represented both parties in the transaction.
The insurance giant also sold the 120,000-square-foot Gateway Business Park in December.
Those two GWL deals, combined with the sale of the 66 Slater downtown office tower and three office buildings on Innovation Drive in Kanata, meant December finished with just under $145 million in investment activity.
“It certainly shows that momentum is returning to the market,” says Mr. Smith, adding he expects to see more activity in the months ahead.
Participants in the institutional investment market are getting a clearer picture of property values, as well as the supply and demand of office inventory, he says.
However, Mr. Smith says demand for quality investment products is likely to outstrip supply in the short term, lowering yield expectations.
“Everybody would like to buy Ottawa government-leased assets. (But) the reality is that there are not very many of them available in the market at any time because people don’t like the sell their government-leased assets.”
He says the Queensway Corporate Campus is fully leased, with government tenants occupying slightly more than 200,000 square feet. Other major tenants include Delcan and London Life.
The property sits in one of Ottawa’s tightest suburban markets. Commercial real estate services firm CB Richard Ellis recently reported a direct office vacancy rate of only 1.3 per cent in the east submarket.
The low vacancy rate means there is a high probability of tenants renewing their leases, allowing landlords to be “a little more aggressive” on their rental rates, says Mr. Smith. This, combined with a high government presence, enhances the property’s value, he adds.
The Forces’ non-public property group has hired Inside Edge Properties Ltd. for property management services.
QUEENSWAY CORPORATE CAMPUS
Vendor: Great-West Life and London Life
Purchaser: Non-public property branch of the Canadian Forces
Cap rate: Just under 8%
Properties: 4210 Labelle St. (single-storey structure built in the late 1960s and renovated in 2001), 4200 Labelle St. (five storeys, built in 2002), 1223 Michael St. (five storeys, built in 1990)
The three fully leased buildings total approximately 285,000 square feet. The 14.5-acre site has the capacity for two additional 100,000-square-foot multi-storey buildings.