The article previously cited an incorrect statistic for Kanata office vacancy rates. The figure has been corrected.
With Kanata’s office vacancy rate at its lowest level in more than a decade, some of the west end’s largest tenants are signing new leases to accommodate growth – setting in motion a string of moves as other firms quickly snap up the recently vacated space.
Calian, Mitel and Ford are among the major employers that have found new space in Kanata. Elsewhere, InGenius, Trend Micro and Ranovus are also expanding.
“There is a domino effect in the park,” said Amy MacLeod, Mitel’s vice-president of communications. “When space frees up, it quickly becomes available for others.”
Calian to Kanata South
The first big move was in September 2018, when professional services firm Calian moved from its former home at 340 Legget Dr. to 770 Palladium Dr., a Kanata South location close to the Canadian Tire Centre. The new space, formerly occupied by IBM, saw the firm’s footprint expand from nearly 27,500 square feet to 35,000 square feet.
Marc Shank of Cominar, the building’s manager, told OBJ in August the company revamped the property for Calian’s move, adding new conference and training rooms as well as a cafe, gym and yoga studio available to residents of 700, 750 and 770 Palladium Dr.
The move reflects the company’s recent growth – Calian made its seventh acquisition in six years this fall and posted its 68th consecutive profitable quarter in the three-month period ending fiscal 2018.
Ford right next door
Cominar also has another project under way right next door, thanks to another big-name lead tenant that’s agreed to take a significant chunk of space at the new property.
At 100,000 square feet, 800 Palladium Dr. will be significantly bigger than the other three properties the firm owns on the street. The building is slated for completion in 2020, and pre-leasing has already begun, Shank told OBJ.
According to prominent Ottawa broker Bruce Wolfgram, the main tenant will be the Ford Connectivity and Innovation Centre, which will be moving from its current location of one floor at 4000 Innovation Dr. and will occupy 40,000 square feet in Cominar’s new building. Part of the Ford facility is already located near the new building at 700 Palladium Dr., where the automaker leased 62,700 square feet in another Cominar property earlier this year.
The centre opened in 2017, bringing 295 jobs to the park as part of Ford’s $1.2-billion investment in its Canadian operations. Its main focus is on developing autonomous and connected vehicles.
Mitel moves in on old Ford space
Ford’s planned move put 4000 Innovation Dr. up for grabs, but the space was quickly snapped up by Mitel, which had been eyeing new locations for its headquarters for about a year, said MacLeod. The telecom giant is taking all three floors of the building for a total of 150,000 square feet.
Though the move from 350 Legget Dr. – colloquially known as “the Mitel building” – doesn't change the company’s square footage, MacLeod said the firm wanted to have a building to itself after sharing its current home with several other tenants for many years.
However, it was important that the company didn’t venture too far, MacLeod said.
"We certainly always build for the future."
“Of course we're staying in the tech park, which has been our home and heritage for 45 years,” she said. “That’s a given.”
The new location, which Mitel will take over in late 2019, boasts outdoor space on every floor and will undergo renovations to meet the company’s technical standards. Mitel currently employs about 550 people in Kanata, and the new space will have room for more.
“We certainly always build for the future,” said MacLeod.
InGenius fills in Calian’s old space
Also vacating 350 Legget Dr. is InGenius Software, which currently operates out of multiple units in the building. The firm’s significant growth – from 19 people in 2012 to 65 today – means it’s ready for its own space, said CEO Dale Gantous.
The company found room just around the corner from the Mitel building, where Calian’s departure has left almost 27,500 square feet ready for the computer telephony integration firm. That’s an increase of about 13,600 square feet from InGenius’s current location.
The company is effectively doubling its physical footprint after eight years in the tech park, with room to double its headcount as well. And that growth is almost certainly bound to happen, Gantous said.
“We're constantly acquiring more and more enterprise customers,” she said, naming Expedia, LinkedIn and The Gap as some of the firm’s clients. The company made this year’s Growth 500 list of Canada’s fastest-growing firms with a five-year revenue jump of 446 per cent.
Trend Micro goes big, Ranovus looks to expand
Across the park, another global enterprise is also expanding its operations in Kanata. Cybersecurity firm Trend Micro recently took over all five floors of 40 Hines Rd. from a previous two, a total of 78,300 square feet, as it looks to expand and acquire more talent.
The company grew from 150 employees in 2016 to 225 as of July 2018.
And, on the edge of Kanata, optical hardware firm Ranovus is anticipating a big move in early 2019.
The 40-plus-person company’s headcount is set to double by the middle of next year, founder and CEO Hamid Arabzadeh told OBJ in November. Its new manufacturing and R&D facility, which will include all of Ranovus’s operations, will also be located in the west end – possibly closer to the tech park.
Arabzadeh predicts the firm will eventually employ up to 500 people. But if the commercial real estate market in Ottawa’s tech-heavy west end is any indication, his company may be hard-pressed to find space for all those workers.
Tightening Kanata office market
As MacLeod notes, commercial space in the tech park, and in Kanata in general, is quite limited.
“The tech companies that are here continue to grow and to drive expansion for our park and for the city at large,” she says.
Kanata office vacancy rates are projected to be 6.2 per cent for Q4 2018, down from 12.6 per cent in Q4 2017, according to Shawn Hamilton, senior vice-president of CBRE. Hamilton says Kanata is approaching pre-tech boom vacancy rates – before and during the bust, rates went from zero per cent to as high as 29 per cent and have been recovering ever since.
Wolfgram, a principal at Proveras Commercial Realty, said a number of major commercial property managers are ready to follow Cominar’s lead and break ground on new properties in Kanata to meet that growing demand once they secure lead tenants.
KRP Properties, Colonnade BridgePort and the Regional Group all have land primed for development, he said.
“We’re experiencing scenarios we haven’t seen in many years where we need to bring new build options into the mix because there’s just not enough existing space any more,” said Wolfgram, who predicted more than half a million square feet of inventory could be built in Kanata over the next few years.
KRP Properties, the tech park’s largest commercial real estate manager, currently operates 35 light industrial and office buildings in and around Kanata North and manages notable locations such as Mitel’s current space on Legget Drive.
"It’s an exciting time for business in Ottawa – it’s just going to be challenging for tenants.”
KRP’s portfolio includes 3.2 million square feet of space as well as land on Terry Fox Drive next to the Stealth Building that looks ripe for the park’s next big development. KRP leasing director Linda Sprung told OBJ in July that the company’s next build will add 150,000 square feet to its portfolio.
Wolfgram said today’s red-hot market is reminiscent of the dot-com boom of the late ’90s, when the vacancy rate was virtually zero and new tenants were filling offices literally the day after their predecessors left.
“We haven’t even come close to that point until now,” he said. “So either companies are going to have to plan ahead … or else they need to leave the west end. But it’s not as if there’s scads of vacant space elsewhere necessarily either. It’s an exciting time for business in Ottawa – it’s just going to be challenging for tenants.”
– With files from David Sali