Ottawa’s office leasing market is “holding up relatively well” despite the body blow the novel coronavirus has dealt to the local economy, one of Ottawa’s leading commercial brokers says.
Bruce Wolfgram, a principal at Ottawa-based Proveras Commercial Realty, concedes “there is a certain amount of anxiety” among landlords and tenants right now as the effects of the COVID-19 lockdown ripple through the real estate industry.
But the veteran broker says there’s been no shortage of interest in vacant office properties in Ottawa in recent weeks, noting his firm is currently in “a number of negotiations” with landlords on behalf of tenants seeking long-term leases.
“Office space is holding up relatively well in comparison to industrial or especially retail,” Wolfgram says.
Proveras recently negotiated a long-term lease for the Federation of Canadian Municipalities to take over 35,000 square feet on three floors at 66 Slater St., space formerly occupied by the federal government.
The group, which is headquartered in a building it owns at 24 Clarence St. in the ByWard Market and also occupies spillover office space at 10 Rideau St., will move into the new digs this fall after vacating the Rideau Street site. FCM will also maintain its head office on Clarence Street.
Wolfgram says the non-profit organization looked at a variety of properties in the central business district and the ByWard Market before deciding on the recently renovated Slater Street site, which is managed by Colonnade BridgePort.
“There was a lot of interest” among landlords when FCM began shopping for new space, he says. “It’s a very good-quality tenant.”
Ottawa’s commercial vacancy rate had been steadily tightening for more than two years before the pandemic hit. But some industry experts suggest the market is in for a rocky few months as landlords and tenants deal with the economic fallout of COVID-19.
A recent report from fellow Ottawa brokerage Real Strategy Advisors said that while the capital’s economic situation remains “fairly encouraging” in the wake of the crisis, the current economic slump “will likely create more vacancy and put downward pressure on rental rates for the remainder of the year.”
Meanwhile, some observers also wonder if more tenants will follow the lead of tech giants such as Ottawa-based Shopify or social media giant Facebook, which both recently announced they will be encouraging employees to work from home permanently once restrictions aimed at curbing the spread of the novel coronavirus are lifted. Some have questioned whether that could lead to a glut of office space as tenants downsize their footprints.
Wolfgram agrees that until a vaccine or effective treatment for COVID-19 is found, many workers likely won’t feel comfortable intermingling with colleagues on a regular basis.
But he also says he’s not seeing a rush toward the remote-first work strategies being championed by Shopify and others, adding he believes the benefits of shared workspaces will ultimately outweigh the perceived risks.
“We haven’t encountered anybody who said they can’t wait to continue (working from home) for the rest of their lives,” Wolfgram says, adding he was “quite surprised” at Shopify’s announcement.
“The idea in many companies’ minds of keeping all their employees at home ... we don't believe that’s going to happen. We believe the companies that are stating that now will (soon) realize that this is not a good move from a culture standpoint (and) employee retention standpoint. So much is gained by having people working together and having social interactions.”