Office developers running out of downtown land

Peter
Peter Kovessy
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Condo builders are squeezing office developers out of the downtown core to the point that the few remaining commercial development sites are insufficient to meet demand for new space beyond the next decade, according to a local real estate expert.

(File photo)

Nathan Smith, a senior vice-president in Cushman & Wakefield Ottawa’s capital markets group, said developers have constructed slightly more than six million square feet of office space in the central business district over the last 30 years, including 2.5 million square feet since 2001.

In a luncheon speech Wednesday to members of the Ottawa chapter of the Building Owners and Managers Association, Mr. Smith said the central business district can accommodate an additional 2.5 million square feet of space under current zoning regulations.

The largest remaining downtown office development sites include Brookfield’s surface parking lot at Kent Street, between Queen and Albert streets, Morguard’s property at the corner of Bank and Slater streets, as well as GWL’s site just west of O’Connor Street, between Laurier Avenue and Slater Street.

Alterna Savings is also selling its property on Albert Street for redevelopment, and was in discussions with Broccolini Construction last summer.

Based on past consumption patterns, Mr. Smith said the city will run out of development opportunities by 2023 unless the city relaxes zoning restrictions.

“With the apparent insatiable appetite by our condo developers in acquiring all downtown sites from the Queensway to Parliament Hill, how will the (central business district) keep up with demand for office space?” he said.

“The city has certainly given residential developers free rein, balanced by intensification guidelines … Is it time Ottawa has truly high-rise office development? Should Brookfield, Morguard, GWL and others be permitted to double their density?” he rhetorically asked.

Mr. Smith also highlighted that federal downsizing has not had the negative impact on landlords some had predicted.

That’s because Public Works’s portfolio is comprised of buildings that it owns as well as space that it leases from the private sector.

While the federal government has indicated it has or will vacate 1.4 million square feet in central Ottawa, the bulk of that space has been in the older buildings that it owns and are in need of extensive renovations, according to Mr. Smith.

Rather than putting the pinch on landlords, he said Public Works has actually increased its leased portfolio by approximately 270,000 net square feet. Those landlords losing government tenants are generally the owners of older properties that would have been at risk with or without federal budget cuts, Mr. Smith said.

Organizations: Public Works, Broccolini Construction

Geographic location: Ottawa, Kent Street, O’Connor Street Laurier Avenue

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  • Pierre
    February 19, 2013 - 16:56

    The NCC gets involved with height restrictions in the Parliamentary precinct, what we call the central business district. There is a historical report dealing with height and other elements such site lines from "parade routes" (Colonel By Drive for example) so that arriving dignitaries/heads of state have an unobstructed view of the Peace Tower when arriving to Ottawa. This report has limited height to conform with the NCC's vision and in certain cases, superseded the City's permissible zoning for certain areas. It was a detailed and comprehensive report that I had purchased in the mid-90's relating to a file I worked on but I cannot recall where I stored it. It will explain why the City looks the way it does and why it is being shaped in this fashion...

  • Michael
    February 14, 2013 - 09:42

    Author, can you please publish your references or detail the information on 'increasing 270k square feet'?

    • Peter Kovessy
      February 14, 2013 - 09:50

      Hi Michael. The net 270,000 square feet reflect the Department of Justice and the Bank of Canada leaving a government-owned building (BoC headquarters on Wellington) and leasing space in privately owned properties (Sun Life Building and 234 Laurier Ave., respectively). At the same time, Health Canada will move out of 123 Slater (110,000 square feet) by the end of April. According to Mr. Smith's calculations, this adds up to a net 270,000 square feet of private sector space leased by the feds.

  • Harley
    February 13, 2013 - 22:13

    The City of Ottawa's ridiculous height controls are finally biting them in the ass. Maybe if they didn't force developers to take up entire city blocks with two or three 15-20 story stumps and had used the space more wisely (vertically) then this wouldn't be an issue.