BONA raises questions with 10-storey office building

Peter
Peter Kovessy
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Public Works says it’s not affiliated with project

An Ottawa developer with a history of speculative builds is raising eyebrows by constructing a new office tower with no confirmed government tenants in a market with weak private-sector demand.

Bona's property, seen under construction last month. (Photo by C.W. Clark)

 

Bona Building and Management Co. is excavating its property at 140 Jeanne Mance St., just off the Vanier Parkway between Montreal Road and McArthur Avenue. The property previously featured a one-storey industrial building, according to the city.

Last December, the developer filed site plans with the city to build a 10-storey office building, containing 273,400 square feet and three levels of underground parking.

Bona head Robert Vocisano received numerous messages from OBJ but “doesn’t do interviews,” according to his assistant. A company official, speaking on background, said the new building is being constructed on “spec,” meaning no would-be tenants have pre-leased space inside the new tower.

This was no surprise to some local commercial real estate watchers.

“Bona is known for (building on spec),” said Nathan Smith, senior vice-president at Cushman & Wakefield Ottawa, during a panel discussion last month at the Ottawa Real Estate Forum.

“Maybe they know something we don’t know,” Brian Murray, Sakto Corp.’s director of leasing and business development, later added during the same panel discussion.

Some local brokers said there are rumours that the RCMP will eventually take a portion of the new building.

For its part, the federal government denied any deals to occupy the new building.

“(Public Works) has made no commitment to lease space at 140 Jeanne Mance St.,” said department spokesperson Nathalie Bétoté Akwa. Public Works handles accommodations for the RCMP, a spokesperson for the national police force said.

But some said it’s hard to imagine a tenant other than the federal government occupying the new building, given sluggish private-sector sector demand for office accommodations.

Furthermore, tenants looking for space have other competitive options, both in the downtown core as well as in the eastern suburban market.

If truly being built on spec, the project also raises questions about how Bona is financing the building. Lenders usually require a building to be 50-per-cent pre-leased, at minimum, before making a loan.

Ottawa’s last speculative office building – the city’s first in several years – was completed slightly more than a year ago by Minto at 180 Kent St.

However, the company was building in a very different environment than Bona is now. When Minto broke ground, the downtown vacancy rate was below three per cent and the federal government was snapping up almost every available block of space in the core.

Minto – which has thousands of rental units providing it with a steady income stream – was also building on a prime downtown location, adjacent to its existing office towers.

Speaking at last month’s real estate forum, Greg Rogers, executive vice-president of Minto Commercial Properties, said one floor remained vacant at 180 Kent, but that he expected the building would be filled by the end of the year.

 

 

Organizations: Bona Building and Management Co., RCMP, Public Works Ottawa Real Estate Forum Sakto Minto Commercial Properties

Geographic location: Vanier Parkway, Ottawa, Montreal Road McArthur Avenue

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