The developer behind a 21-storey office tower under construction in the downtown core says it expects the building to be fully leased when it’s completed in 2014, despite increased competition among local landlords and tepid demand from tenants.
Morguard Investments is constructing its Performance Court tower at the corner of Elgin and Gloucester streets on the site of the former Friday’s Roast Beef House and a surface parking lot.
It has pre-leased a little less than a third of the 360,000-square-foot building to the Canada Council for the Arts.
Performance Court is the only non-government office building currently under construction in the core, which is one reason Morguard decided to pull the trigger late in 2011, almost six years after acquiring the property from the City of Ottawa, said Morguard vice-president Arthur Tallis in an interview at a recent launch party for the project.
Additionally, he said there is a 10-year cycle of private-sector leases in Ottawa that come up for renewal mid-way through each decade, which is when Morguard’s new building is slated for completion.
Tenants shopping for large pockets of downtown space currently have several options, including the Sun Life Centre and subleases inside the Telus Building and the new Export Development Canada tower.
Additionally, the owners of the old EDC building are pouring millions of dollars into renovating the old Crown corporation’s headquarters before bringing it back to market, creating a level of competition among downtown landlords not seen in several years.
However, Mr. Tallis said those buildings are unlikely to directly compete against Performance Court.
“I suspect a lot of that space is going to disappear in the next few months. At that point in time, we’ll be the only game in town for new class-A space,” he said.
“We expect to be fully leased in 2014.”
The asking base rent for space in Performance Court is roughly $29 a square foot, compared to an average of $22 to $24 a square foot for class-A downtown space in Ottawa. But Mr. Tallis said the building’s energy efficiency features will lower operating costs for tenants and will offset the higher base rent.
Officials spent considerable time emphasizing their intent to construct the building to a LEED gold environmental standard. Mr. Tallis said there is considerable interest among employers to move into green office space because of studies showing a correlation between factors such as air quality and employee retention.
In a speech to attendees, Morguard president and chief operating officer Stephen Taylor took aim at critics who say Ottawa developers frequently construct downtown buildings to low architectural standards.
“We’ve heard the complaints that most of the city’s office buildings were built by the lowest bidder to the lowest standards,” he said.
“I’m here to tell you that (Performance Court) is being built to the highest standards.”
The companies constructing Performance Court also include DCYSA Architecture & Design and general contractor PCL Constructors Canada. It’s the same team that built the CBC building on Queen Street, which is also owned by Morguard.
In the interview, Mr. Tallis also waded into the debate over the best location for a light rail station in the eastern part of downtown. The city wants to move it further east, closer to the ByWard Market, but Mr. Tallis noted an Elgin Street station would serve office workers in his company’s building, along with the new government tower under construction a few blocks north.
“You’re going to see Elgin Street become more of a node, with 90 Elgin and 150 Elgin. I would think we would appreciate seeing the LRT station at Elgin,” he said.
Morguard is expecting to be active on the development front in Ottawa in the coming years as it expands the St. Laurent Shopping Centre and prepares to construct another new office tower at the corner of Bank and Slater streets.