Feds snub Ottawa real estate industry to dodge press

Public Works property branch questions future public speeches

Fear of media coverage caused the deputy minister of Public Works to overrule the advice of senior bureaucrats and order the cancellation of a highly anticipated speech to Ottawa’s commercial real estate community last fall, internal government documents show.

Public Works’s top real estate official, Claude Seguin, had been scheduled to speak for 45 minutes at last October’s Ottawa Real Estate Forum, according to printed copies of the itinerary. The federal government traditionally presents, in broad terms, its office space demand projections to the approximately 500 developers, landlords, investors, brokers and property managers in attendance.

Documents obtained by OBJ under access-to-information legislation show Mr. Seguin – a director general in the department’s real property branch – had confirmed his speaking engagement and prepared several drafts of a vetted presentation. However, the office of the deputy minister of Public Works ordered the address cancelled less than eight weeks before the forum.

“Media presence – last year we made the ‘paper’ – our presence is not critical,” reads the handwritten response, dated Aug. 18, 2011, to a July memo addressed to the deputy minister of Public Works. François Guimont was appointed to the position in 2007.

“We can take other means to inform private sector of our plans. Pls (sic) take action accordingly.”

As the National Capital Region’s largest tenant and landlord, the federal government’s movements reverberate throughout the local office market. Senior bureaucrats and industry officials alike have said both sides are best served when the federal government’s long-term requirements are widely understood.

“A discussion about the federal government and its role in the Ottawa office market is analogous to discussing the energy sector and the Calgary market. Rather impossible to do one without the other,” wrote George Przybylowski, the organizer of the Ottawa Real Estate Forum, in an Aug. 19, 2011 e-mail to Mr. Seguin after being informed of the cancellation.

Around the same time, an e-mail appearing to originate from the Ottawa offices of developer and landlord Brookfield Properties was sent to department officials, saying the conference provides “an excellent platform to deliver a message to the real estate industry.”

“(Public Works is) the dominant player in the office market. (Its) participation is very important,” wrote the sender, whose username was suppressed from his or her @brookfield.com address.

In 2009, Mr. Seguin told the forum that government projections showed it needed 4.1 million square feet of office space over five years, necessitating the need for construction of two new office buildings. He added the department would increasingly be looking outside the downtown core for its needs.

Mr. Seguin continued with this theme in 2010, telling the forum the government planned to vacate one million square feet, or 10 per cent, of its downtown office inventory over the next three years.

Mr. Seguin’s absence last year led organizers to replace the speech with an industry panel discussion on the government’s directions.

As reported by OBJ, Altus Insite president Sandy McNair predicted government downsizing would result in Public Works vacating 10 million square feet, or 35 per cent, of its Ottawa office portfolio. Fellow panellist Nathan Smith of Cushman & Wakefield Ottawa disagreed and argued federal downsizing would have a minimal impact on the government’s leased portfolio.

Four months later, The Globe and Mail reported on the debate between Mr. McNair and Mr. Smith over whether pending government cutbacks would cause Ottawa’s downtown office market to tank. That article was said to have spooked Mississauga-based executives at Morguard, who at the time were signing off on construction of a new 360,000-square-foot office tower on Elgin Street.

(The project, dubbed Performance Court, was still approved and is scheduled to be completed in early 2014).

When OBJ first asked in October about Mr. Seguin’s absence, Public Works said it was due to “an unfortunate misunderstanding in communications regarding the department’s commitment to participate.”

Heavily redacted department e-mails show that response was circulated to at least 14 civil servants before being released.

In response to additional questions posed this month, Public Works spokesperson Sebastien Bois said it would have been premature to speak about the government’s accommodation strategy prior to the spring budget, which contained $5.2 billion in spending cuts.

Furthermore, he said, the department didn’t know that media would attend the 2010 Ottawa Real Estate Forum. (OBJ covered Public Works’s presentation in 2002-04 and in 2009, while the Ottawa Citizen covered it each year between 2002-05).

Mr. Bois said the 2010 speech “was not geared towards a broad public.”

“Such a forum open to public and the media may not be best suited for members of the public service.”

Why participate?

Claude Seguin’s presentation was to focus on the federal government’s “future office portfolio strategies, including projected demand in the context of fiscal restraint.”

Public Works officials said there were several benefits to the government participating:

• The possibility of creating new business partnerships by providing insight into federal government real estate requirements;

• A venue to share information and promote a common understanding of federal organizations’ needs;

• An opportunity for positive, open dialogue with the private sector and real estate community.

Source: Memo to the deputy minister of Public Works, signed by John McBain, assistant deputy minister of Public Works’s real property branch, dated July 22, 2011.