Ottawa continues to be a dynamic and diverse market for office tenants currently leasing or expanding into the National Capital Region. At Primecorp we are very 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:
- Accenture, 45 O'Connor Street, 14,700 square feet
- BMO Nesbitt Burns, 979 Bank St., 18,900 square feet
- Halogen Software, 495 March Rd., 9,300 square feet
- Kinaxis, 700 Silver Seven Rd., 32,300 square feet
- ProtoForms Corp., 2500 Solandt Rd., 26,000 square feet
- St. John Ambulance, 1050 Morrison Dr., 10,200 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.
Ottawa’s downtown core continues it’s expanding run as a “Tenant’s Market” for office leasing. Class A buildings presently show an aggregate 9% vacancy rate, while Class B buildings currently have a 14% vacancy rate, with both classes having increased their vacancy rates by 2% in the last 12 months. This is an excellent situation from the standpoint of my team, who negotiates with landlords to get the best leases for office tenants.
Trivia Tip: Did you know that Ottawa’s downtown core comprises 42% of all office space in our capital city?
The Federal Government
Despite the fact that many people don’t want to see Ottawa as a “Government Town” anymore, The Federal Government still has a substantial effect on commercial real estate in Ottawa. Many pundits are of the view that net rates downtown will start moving upward as soon as the Feds start topping up staffing levels across departments that shrunk during the decade that the Tories were in power.
Light Rail Transit (LRT)
Ottawa’s new Light Rail Transit System, currently under construction and scheduled to come online in 2018, has got both landlords and tenants alike buzzing over the business implications. Many landlords are promoting the fact that LRT will provide either direct entry up into their buildings, or will necessitate only a short walk to nearest stop from their buildings. Meanwhile, tenants can visualize the potential of the LRT program to greatly reduce the need of their staff to navigate traffic on their daily commute, which can lead to greater employee retention and free up everyone's time... all of which is pretty good for the environment as well.
This is market is very Hot! Class A vacancy rates in Kanata have dropped 4% in the past 12 months, benefiting Kanata landlords, especially KRP Properties which now owns about 65% of all Kanata North office buildings. This high demand is also encouraging landlords with office properties a few kilometres south or east to fiercely compete and woo potential tenants, who might be looking for a bit of deal.
Demand in this market is currently flatlined. Although it's not a stellar time to be a landlord in Ottawa East, tenants looking to cut costs might find some bargains.
Biggest "See-Through" Building in Ottawa's History
1625 Vanir Parkway is currently home to the largest "see-though" office building in Ottawa. A see-through building is one without tenants, where you can see right through it. This is a term usually reserved for buildings in cities where the economy is so depressed that landlords cannot even give their space away to maintain the appearance of activity.
As this is not the case in Ottawa, one would ask: why would the landlord at 1625 Vanier Parkway let this attractive, new 300,000 square foot building sit empty as a see-through. The answer: the owners don't want to consider leasing out the space to multiple tenants. They aim to wait for a large, one-tenant Federal Government tender... must be nice to have that kind of coin.
Don’t Overlook these 3 Tenant Improvements
(Based on Piece By Michael Sweeney)
Your tenant improvement allowance doesn't alway have to be about developing the latest and greatest looking office space. These days, business magazine articles and blogs seem to be overflowing with tips on how to create the trendiest office environments with amenities like an ensuite café, stylish conference rooms and the ultra-modern work stations; however, some basic tenant improvements can pay real dividends for those companies seeking to upgrade the office with tangible impacts on the bottom line.
Multiple HVAC Zones
If your lease arrangement allows you to determine the design and setup for your HVAC system, making this system flexible by creating multiple temperature zones can not only lead to increased savings and efficiencies, but also improve the comfort levels your hardworking staff. For example, you can set lower temperatures for a hot server room and any adjacent workspace and, conversely, you can increase the temperature as needed near a cold outdoor-facing wall or door.
Having multiple HVAC zones can save money in the long-run as you won't need to constantly adjust temperatures due to seasonal change. Having some flexibility in your office climate will make it easier to adjust to changing requirements as you configure your office space over time, to match the changing needs of your business.
Investing some of your tenant improvement allowance to make your storage and server rooms more usable can have a significant positive impact on the overall productivity of your office. Creating well-designed storage and server rooms that are large enough meet the changing needs of your office environment, can improve the effectiveness of your staff by making it easier for them to find and organize the resources they need to do their jobs. Having a few different storage rooms, as opposed to just one large room, can allow you to segregate their usage, or revamp excess storage rooms into usable workspace as required.
Having a larger server room will allow you to add another server rack or two as your IT requirements grow over time. This will also make your system administrators and network engineers happier as they will have more room to access cables and equipment with less restrictions.
For many office environments, it might be best to forego hefty investments in immediate spacial improvements, but instead leave large areas of your office as open space and direct your TI allowance to changing office needs as required. Gone are the days of private offices with mahogany furniture for individual employees. Many modern office tenants purposely create open, flexible spaces to foster collaboration, a greater sense of team and flexibility to accommodate changing business requirements. For example, the farm of cubicles you currently use for customer service might become a team training facility for your graphic design department a little bit down the road.
Maintaining a large open space, with minimal TI investments to the actual work area can also free up some cash to be directed to improving public reception areas so that you can wow clients and prospects with your professional environment. Such funds could also be directed to building conference rooms, employee meeting areas, space for private phone calls and providing hotel accommodations for employee travel.
LEED Certified Buildings: The Savvy Tenant’s Choice
(Based on Piece By Jason Brucella)
For an increasing number of office tenants, having a LEED certified building has become a necessity. Green buildings can do a great deal for your business and your brand, improve employee retention and result in lower operation costs.
With an increasing demand by tenants for greener office space, LEED certified buildings are becoming a standard requirement of higher-end office properties that stand out in today's competitive environment. Moreover, the standards for achieving LEED certification usual result in a building with high-end finishes and attractive amenities.
Research indicates that newly constructed LEED certified buildings have significantly lower operating costs (13.6%) than non-LEED certified buildings. Even retrofitting existing properties results in an 8.5% operational cost saving. Much of these savings are achieved by lower water and energy use; therefore, LEED certification acts as hedge against any increased costs of these commodities in the future.
Sustainability achieved through LEED certification, is not just beneficial for our environment. LEED certified buildings also provide better working conditions for employees. These buildings typically have a greater abundance of natural light which boosts productivity and contributes to a positive mood in the office. The ecologically-friendly construction and ventilation found in LEED certified buildings results in much better indoor air quality, making them more pleasant to work in and resulting a reduction in employee sick days.
Choosing a LEED-Certified building in which to set-up shop also demonstrates that your company is serious about corporate responsibility and sustainable business operations. This commitment enhances the PR value of your brand, makes it easier to attract ecologically sensitive clients, and improves the desirability of your work place in the eyes Millennials who are notoriously picky when it comes to their work environments.
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.