Could L’Esplanade Laurier soon be on the block?

l'esplanade laurier
Aging government office complexes such as L’Esplanade Laurier could soon be on the block, a federal official said this week.

L’Esplanade Laurier and other aging federally owned buildings could be on the market in the next few years as the feds look to modernize their real estate portfolio in the National Capital Region, a high-ranking government official said this week.

Stéphan Déry, the assistant deputy minister for real property services at Public Services and Procurement Canada, said the federal government’s plan to cut greenhouse gas emissions by a minimum of 40 per cent by 2030 will likely include selling off older buildings that don’t meet today’s energy-efficiency targets.

He cited the L’Esplanade Laurier complex on Laurier Avenue – which consists of two 23-storey office towers, a three-storey underground parking garage and a retail podium that were built more than 45 years ago and have recently undergone renovations – as a prime example of a property that could be sold to private developers and converted into other office or residential uses.

“These large assets that are at the end of their useful life, we’re going to be looking to dispose of them,” Déry told Cushman & Wakefield Ottawa managing director Nathan Smith during a presentation at this week’s virtual Ottawa Real Estate Forum.

“I can see L’Esplanade Laurier in the next four, five, six years being on the market for the private sector.”

Greener leases

The federal government currently occupies about 37 million square feet of office space in the region, and about 18 million square feet of that space is leased. Déry said the feds’ push to go greener includes a mandate that 75 per cent of those leases will have to be in carbon-neutral buildings by the end of the decade, suggesting that offers an opportunity to landlords with environmentally friendly properties. 

“We’re looking for space that will be carbon-neutral, that is accessible, modern space,” he explained.

While most of the federal government’s roughly 140,000 employees in the region are still working from home, Déry said it remains to be seen how the shift to remote work during the pandemic plays out over the long haul.

“We’re juggling what the future’s going to look like,” he said. “We know that space may be used differently, but we know we’ll need space.”

The government has renewed about 100 leases totalling 3.5 million square feet of space over the past 18 months, Déry added. He said that while the feds plan to cut their real estate footprint by 30 per cent over the next 25 years, it’s still an open question whether those timelines will be pushed forward in the wake of the COVID-19 crisis.

Satellite offices?

“This could be accelerated, but it’s not something that’s going to be done overnight,” he said.

Déry also suggested that how government office space will be parcelled out could change dramatically as a hybrid work world becomes the norm. 

He said he sees a future where workers are no longer required to commute from the suburbs to central offices in the core. Déry imagined a scenario in which the feds set up a “network” of satellite offices across the country, where civil servants can drop in and share space closer to their homes in the suburbs.

“You may have a building in a remote location, but it doesn’t serve only one department, it serves all the federal public service, and it’s that kind of co-working space,” he said. “We see a takeup on that and an interest from multiple departments.”