The owners of the St. Laurent shopping centre say they are considering a “massive redevelopment” of the region’s third-largest mall that could include a hotel, office tower and residential complex.
Morguard CEO K. Rai Sahi told OBJ in a recent interview that the pending arrival of light rail opens up “all kinds of potential opportunities” at the retail and commercial complex five stops east of downtown.
In addition to the 865,000-square-foot shopping mall, Morguard also owns an 88,000-square-foot office building next door and has several acres of property ready to develop nearby, Sahi said.
With an LRT station just steps away set to open in mid-2019, “it becomes viable to put an office building in St. Laurent,” he said.
Sahi said Morguard is looking at various options for new construction projects at St. Laurent.
“In the future, (St. Laurent) will be one of our core development opportunities.”
While the shopping centre will remain the key component, “you could see an office building coming up there, an apartment building coming up there, a hotel, or all of the above,” he added. “In the future, (St. Laurent) will be one of our core development opportunities.”
Morguard isn’t the first builder to see LRT-related development potential near shopping malls along the Confederation Line. A few kilometres east of St. Laurent, RioCan and Killam Apartment REIT are building hundreds of rental apartments near Blair station and Gloucester Centre.
Based in Mississauga, the Morguard group of companies is Ottawa’s largest commercial landlord with more than five million square feet of property. Long a major player in the Ottawa market, Morguard has become even more prominent in recent years following a number of acquisitions and high-profile builds.
New Hilton Hotels
The company recently opened a pair of Hilton-branded lodgings at its redeveloped Queen Street property, a project Sanjay Rateja, Morguard’s vice-president of hotel operations, called the “crown jewel” of its national portfolio. Late last year, Morguard announced it was buying 49.9 per cent of the 552,000-square-foot Jean Edmonds Towers office complex at 300 Slater St. and 365 Laurier Ave.
Among its other notable properties are the CBC broadcast centre at 181 Queen St. and Performance Court, a 360,000-square-foot office tower at 150 Elgin St. that it built on spec before attracting Shopify, CIBC, KPMG and other prominent tenants.
Spurred by the rise of “urban tech” firms such as Shopify and others, Ottawa’s commercial real estate market has experienced a bit of a renaissance over the past year or so.
According to Colliers International, the availability rate of downtown office space – the amount that’s on the leasing market, even if it’s currently occupied by existing tenants – fell from seven per cent in the last quarter of 2018 to just 4.8 per cent in the first three months of this year.
Although brokerage firm CBRE warned earlier this spring that the shortage of available commercial space in Ottawa is tying the hands of tenants looking to expand or relocate, Sahi said he’s not expecting a wave of new office developments any time soon.
“I don’t think anybody is building in a hurry on spec in the office (sector),” he said. “We might, depending on what happens.”
Sahi said Morguard owns several pockets of prime real estate in the core, including space next to Performance Court. He said much of the firm’s development strategy will hinge on what the city’s largest office tenant, the federal government, decides to do.
“Will they end up coming back to downtown as opposed to going to the suburbs? We’re hoping that the government will continue to grow.”
While Morguard keeps looking for opportunities to expand its footprint in the National Capital Region, Sahi noted that other dominant landlords such as Brookfield and big pension funds have scaled back their presence.
Brookfield, for example, divested itself of Jean Edmonds Towers last fall. A year earlier, the then-owners of Constitution Square – Oxford Properties, the real estate arm of the Ontario Municipal Employees Retirement System pension fund, and the Canada Pension Plan Investment Board – sold the massive downtown office complex to a consortium of developers.
Meanwhile, Sahi said he remains as bullish as ever on the city.
“We basically love Ottawa,” he said. “It’s the capital of the country, and we don’t have very many major competitors.”