Deals of the Year – Real Estate: Kinaxis, Taggart building momentum in Kanata west

Construction of software firm’s new HQ expected to be ‘catalyst’ for wave of future builds in burgeoning tech hub
Kinaxis
A rendering of Kinaxis's planned headquarters in Kanata west.

Back in 2007, the Taggart Group of Companies made a prescient decision to buy a swath of land near a major highway off-ramp in the west end of Kanata.

“We knew that Kanata North was building out rapidly at the time, and we felt that there was an opportunity for a business park to be created (farther to the southwest),” explains Jeff Parkes, the vice-president of planning and development for Taggart Realty Management, the Taggart Group’s real estate arm.

Clearly, they were on to something. 

More than a decade later, commercial vacancy rates are hovering near an all-time low in the burgeoning tech hub, and that land just north of the Queensway is now ripe for development. Taggart’s transaction of a dozen years ago looked like a stroke of genius this summer when one of the region’s fastest-rising tech firms, Kinaxis, chose the Ottawa-based company to build its brand-new headquarters.

The building will be located kitty-corner to the Tanger outlet mall on the northwest corner of Huntmar and Palladium drives, just a stone’s-throw from the Canadian Tire Centre and a couple of kilometres south of the tech epicentre of Kanata North. Taggart is expected to break ground on the project next spring.

Kinaxis will be the sole tenant at the 153,000-square-foot space. In addition, the firm has the option to add a second building of 100,000 square feet to provide space for future growth.

“It’s not very often that an RFP for a new office building for a very well-established Canadian business such as Kinaxis … comes out,” adds Parkes. “We’re very excited about what (the Kinaxis project) may attract in the future as far as other high-tech tenants or for that matter any other office tenant.”

It was a rare opportunity indeed. New builds of the scope Kinaxis was looking for have been almost as uncommon a sighting in Kanata in recent years as a deep Senators playoff run. When the RFP came out in the summer of 2017, virtually every major contractor in the city jumped in on the bidding.

“There were several excellent candidates, and it was very competitive,” says Alan Doak, a principal at Proveras Commercial Realty, the brokerage that represented Kinaxis. “It was a difficult decision. There was not a clear frontrunner right up until the very end.”

Traffic issues

Kinaxis left no stone unturned as it weighed the merits of each bid, gathering input from many of its 400 local employees as to what types of amenities they’d like to see in their new home and ​– just as important ​– where they wanted their new office to be.

Traffic congestion was cited as a major concern for many workers who had to navigate their way through Kanata North’s increasingly clogged arteries. In the end, the lure of Taggart’s location in Kanata west – just a few hundred metres from an off-ramp to the Queensway – tipped the scales heavily in its favour.

“We just don’t know how that (traffic issue) would ultimately get solved in Kanata North,” Kinaxis CEO John Sicard told OBJ back in July, adding that when the winning bid was announced, there were “cheers all over the office. That tells us we definitely made the right decision, which is great.”

The $35-million project is a feather in Taggart’s cap to be sure, but experts say the ripple effect it’s expected to create could ultimately generate hundreds of millions of dollars in additional economic spinoffs in Kanata.

“I do think that this will be a catalyst for at least the idea for other companies to consider building brand-new buildings for themselves,” says Taggart Group vice-president Derek Howe, noting his company alone has nearly 40 acres of prime development land waiting to be occupied near the Kinaxis site. “There really is nothing available for large, large users out in Kanata west.”

Doak agrees, noting that tenants in Kanata typically pay a third less in overall leasing costs than their downtown counterparts, due largely to a combination of lower taxes and cheaper land prices.

“You have many sites to choose from, and you’ll be building a building that’s surrounded with other office buildings which are full of similar, professional private-sector tenants,” he says. “So I do expect that that’s an area where we’re going to see development happening more often.

“This is one building, and if the economy stays strong, we’ll probably see others coming up in the near future as well.”