COVID-19 'uncertainty' puts shackles on Ottawa real estate market in Q2, report says

Train Yards building
BentallGreenOak’s $97.5-million acquisition of a 240,000-square-foot office building at the Ottawa Train Yards was the city's largest real estate transaction in the second quarter. File photo

The volume and value of real estate transactions in the Ottawa region plummeted in the second quarter of 2020 compared with a year earlier as cautious investors stayed on the sidelines during the COVID-19 lockdown, a major research firm says.

A total of 50 office, retail, industrial, apartment and hotel properties changed hands in Ottawa in April, May and June, a 37 per cent decline from the same period in 2019, Altus Group said in its Q2 investment transaction report released earlier this month.

Those deals were worth a combined $399 million, meaning the total value of second-quarter real estate investments was down 43 per cent from a year ago. The first half of 2020 saw a total of 132 transactions amounting to $820 million, down from $1.1 billion in 2019 as the pandemic took its toll on the city’s investment market.

The COVID-19 crisis “has naturally led to great uncertainty for investors and the global economy, affecting many potential sales,” the report said.

“Overall, the lack of significant transactions was a major story in the second quarter, with only four transactions closing for over $30 million,” Altus’s analysts added, highlighting “disappointing results” in the industrial sector ​– which saw investment volumes drop 74 per cent ​– and the apartment segment, in which volumes fell 72 per cent.

The office sector held up strongest in the second quarter, thanks largely to BentallGreenOak’s $97.5-million acquisition of a 240,000-square-foot office building at the Ottawa Train Yards from a local developer. A total of $204 million worth of office properties changed hands in Q2, representing just over half of the city’s total investment tally.

“In the first half of 2020, the office sector remained steady and the land sectors continued to be in demand as the Ottawa market continues its growth and developers look to add sorely needed commercial and residential space to the area,” the report said.

Other notable investment transactions in the second quarter included:

  • Crown Realty Partners’ $56.4 million acquisition of a range of office space in Ottawa, Nepean and Gloucester from CanFirst Capital Management;
  • Broccolini’s purchase of 64 acres of development land at 222 Citigate Dr. in Barrhaven – the future site of a 2.7-million-square-foot Amazon distribution centre – from Regional Group for $44.8 million; and
  • The $33-million acquisition of a five-storey, 63,000-square-foot office building at 126 York St.