The Ottawa area is a dynamic and diverse market for office tenants currently leasing, or considering renewing or expanding into the National Capital Region. At Primecorp Commercial Realty Inc., we are acutely aware of the changing currents of this market, by virtue of our work with a range of outstanding clients, and by continuously monitoring the pulse of what's happening around town in relation to our business community.
Primecorp's Tenant Representation Group, led by Vice President Bruce Wolfgram, is always keeping an eye on significant deals and trends in the Ottawa Office Leasing Market. The following are some of the major deals that have taken place in recent months:
- Assent Compliance, 525 Coventry Road, 42,500 square feet
- Desjardins Group, 1730 St. Laurent Blvd, 28,000 square feet
- Engineers Canada, 55 Metcalfe Street, 15,326 square feet
- Equiis Technologies, 10 Brewer Hunt Way, 17,287 square feet
- Harris Decima, 123 Slater Street, 10,546 square feet
- Rogers, 1430 Blair Place, 53,677 square feet
- Spartan Bioscience, 2930 Baseline Road, 16,451 square feet
Each major transaction informs the office leasing sector and enables us to get a real sense of the market for office space in various quarters throughout the city. Here's our sense on what's happening in office leasing market around Ottawa in the fall of 2016.
Downtown Ottawa remains a strong tenant’s market for leasing commercial office space. Downtown office vacancy rates have been quite high for the past 2 years and are expected to remain high for at least the next 12 months. If you want to renew downtown or move your office downtown, now is the best time to negotiate a lease since the 1990’s, but it's not likely to stay that way for too long.
The wild card here is the Federal Government. Many political observers predict that it is only a matter of time before the Liberals expand their spending focus, which has been happening across the country since their election last fall, to increasing the size of the public service in Ottawa, which had been diminished over the past decade under the Tories. When the first announcements of this kind of spending surface, landlords will tighten up and begin raising their rental rates in the downtown core.
Kanata: Ottawa West
There is currently lots of activity happening in Ottawa’s west end, with a number of companies looking to renew or relocate within the Kanata area, including some big names such as tech giant Apple. There's speculation from the Huffington Post that the world's highest valued company might be researching driverless cars in Kanata, and according to local sources they've been scoping out suitable office sites since the fall:
According to several sources in the Ottawa real estate community [earlier this year], the Cupertino, California, tech giant has leased a 22,000-square-foot space on the third floor of 411 Legget Drive after shopping for space in the capital area since at least October. Ottawa Citizen
This move could be a beachhead for the resurgence of "Silicon Valley North," as the tech hub was once known. Major landlords are gearing up in anticipation of greater market demand in the area; for example, it is expected that KRP Properties, which already owns 50% of all quality office space in Kanata North, will soon complete its acquisition of two more significant office complexes there.
Ottawa’s east end is still a tenant’s market for commercial office leasing and will remain so for the foreseeable future. The majority of companies have typically opted to be either downtown or in the western suburbs. Over the long term, this might change once rental rates begin increasing again in the Nepean/Kanata and downtown areas. If this happens, companies may be enticed to reconsider the east end with its supply of vacant office space and available land.
There is a new, 9-floor office building, housing 160,000 square feet, going up on spec at 405 Terminal Avenue near the VIA Train station. Although the developer, Controlex, is putting up the building without any tenants signed up in advance, which typically adds significant risk to the project, the company believes they will lease up their new building in short order given its location. This is definitely an area to keep an eye on, especially as it is directly on the upcoming LRT route.
LeBreton Flats Development
LeBreton Flats is one of the hottest developments to watch in Ottawa over the next several years. This area is poised to become the next “Live-Work-Play” neighbourhood for millennials. Currently, the most popular areas for young start-ups in Ottawa have been the ByWard Market and Centretown. Younger employees can rent apartments or buy condos in these areas, walk and/or cycle to work, and drop in for a beer or tapas somewhere on the way back home. LeBreton Flats will ratchet up this concept to new levels not previously seen in the National Capital Region.
The local media, and many sports fans anticipating having their beloved Sens play downtown, have been finely tuned into the process of bringing the LeBreton project to life. Our very own Bruce Wolfgram, a recipient of this year's Governor General's Medal for Volunteers for his work with the Ottawa Hospital Foundation and who has over 25 years experience negotiating office leases for top-notch business tenants, was recently quoted by the Ottawa Business Journal regarding the significance and impact of the new LeBreton Flats:
The redevelopment is the city’s most significant in the past half-century... “If I were an investor or a landlord, I would be very bullish on LeBreton,” said Bruce Wolfgram, vice-president of tenant representation at Primecorp Commercial Realty. “It’s going to be a big deal.”
Mr. Wolfgram said he doesn’t think the LeBreton development will compete with downtown office market; they’re two separate markets. Rather, it will compete with some of the outlying suburban environments such as Kanata or the eastern part of the city, which already has high vacancy rates... The LeBreton redevelopment will also introduce some competition for the nearby billion-dollar Zibi development project on nearby Chaudiere and Albert islands.
“If you talk to many businesspeople in Ottawa right now, it can be a challenge to attract skilled workers to Ottawa,” he said. “Skilled workers want to come to a location in a city that’s exciting... The days of Ottawa rolling up the carpets at 5 p.m., I believe, are long over,” he said. “We’ve already seen that in the downtown core, and I believe we’re going to see that much more with projects such as LeBreton and Zibi.” As featured in The Ottawa Business Journal published on May 09, 2016 by Michael Woods.
These developments are happening in the context of a workplace shift that is changing, not only how we work, but also how traditional office facilities are laid out and designed. Millennials and younger workers, are now increasingly expecting flexible schedules and work spaces to accommodate a blurring of the lines between work, life and play.
Office tenants should pay attention to the shifting workplace landscapes these trends represent, especially when it comes time negotiate or renew their leases. By negotiating lease options that allow for flexibility, to increase or decrease the size of the area to be leased, or the term of the lease, for example, tenants can be more prepared to accommodate the changing needs of their workforce as they unfold with the times.
Get Primecorp Commercial Realty in Your Corner
If you are a business owner or manager seeking to negotiate and enter into a lease, tailored to your specific business needs in the Ottawa area, Primecorp has you covered. Simply contact us. We'd be happy to hear from you, or from other potential office tenants you would like to refer to our Tenant Representation Group.