Feds to farm out more lease brokerage work under new $5M deal with CBRE

Mark
Mark Brownlee
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The local arm of brokerage firm CBRE has won another deal that will see the federal government farm out more of its real estate brokerage services to the private sector.

(Stock image)

Under the five-year contract, which will be worth as much as $5.2 million, the firm will be responsible for negotiating deals on office space of up to 53,000 square feet in size.

“Any time you have a chance to work with the largest occupier in the local market, that’s an exciting opportunity,” said Greg Clark, the vice-president and managing director of CBRE’s brokerage operations in the National Capital Region. “It’s as simple as that.”

The new agreement is a significant expansion on the old deal in terms of its length, size and dollar value.

The previous deal, an 18-month pilot project that also included four six-month options, began in 2010 and was also awarded to CBRE. It allowed the firm to work only on deals of up to approximately 21,000 square feet.

The commercial component has been increased to about 21,000 square feet from 11,000 square feet previously. The new deal also allows for CBRE to work on real estate deals on both sides of the Ottawa River, rather than just in Ottawa, which was the case under the previous deal.

Mr. Clark said the time spent working on the pilot project convinced him it would be something on which his firm wanted to expand.

“It was an extremely good experience,” he said. “We had a very good working relationship, a very good partnership and (we have) no reason to believe it won’t be the same this time.”

Pierre-Alain Bujold, a spokesperson for Public Works and Government Services Canada, did not say how much office space the government anticipated using CBRE for. All he would say is that “the contract is on an as-required basis.”

Mr. Clark said questions about what the expanded relationship with a tenant as large as the federal government will do to CBRE’s ability to represent landlords don’t concern him.

The firm already represents both landlords and tenants, he said, and has “appropriate oversight” in place to help offset those competing interests.

“It’s no different than any other tenant,” he said. “There are conflicts that are inherent in the commercial real estate business and there are standard protocols in place to manage those conflicts.”

He added that “by and large” CBRE doesn’t represent all that many landlords in Ottawa anyway.

The new deal also allows for three one-year options to “extend the contract on the same terms and conditions,” said Mr. Bujold.

Organizations: Public Works and Government Services Canada

Geographic location: Ottawa, National Capital Region, Ottawa River

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  • Michael Wakim
    April 29, 2014 - 10:24

    In addition to artificially driving up commercial rental rates in the Ottawa area, punishing private businesses who don't have infinite money supply. Now the federal government is increasing the "commissions" it pays to CBRE who represents both landlords and tenants. The waste continues.