Builders eye office projects outside core

A pair of planned new office buildings at Tunney’s Pasture and the Ottawa Train Yards could be a signal that developers believe the federal government is ready to shed more real estate in the downtown core, a prominent local broker says.

Builders have recently submitted site plans to the city for a proposed 12-storey office tower at the Holland Cross development at 1560 Scott St. and a nine-story building on Terminal Avenue at the Train Yards.

Both properties are located near existing federal offices, making them logical sites for a government looking to move to cheaper space away from downtown, said Darren Fleming, principal managing partner at Cresa Ottawa.

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“This could easily be both developers just getting their ducks in a row for the potential future need,” said Mr. Fleming. “It may be speculative, it may not be. But neither of those owners are likely to break ground without a tenant in place, and the tenant would almost certainly be the federal government.”

As far as he knows, Public Works hasn’t issued any tenders for space in either neighbourhood, he said. Public Works spokesperson Sébastien Bois told OBJ last week “there is no requirement for space at this time” at Terminal Avenue.

The proposed tower at the Holland Cross development, which is owned by LaSalle Investment Management, would add about 180,000 square feet of office space to the complex, currently the site of a pair of eight-storey buildings.

The new structure would be located on about 3.4 acres of land on the southeast corner of the property at the corner of Hamilton Avenue North and Bullman Street. The site is less than 250 metres from the Tunney’s Pasture Transitway station and just south of the Tunney’s Pasture federal government complex.

In December, Public Works told OBJ it had a “preliminary discussion” with a landlord about vacating up to 500,000 square feet of space, but would not specify the location.

Mr. Fleming noted that if the feds are thinking about shedding pricey office space downtown, they might be looking to lease in less expensive areas such as Tunney’s Pasture or the Train Yards.

“We know that there’s more federal government likely to leave the core,” he said. “We don’t know where it’s going, but (Scott Street) is a heck of a place for them to go. They already have a fairly big footprint there.”

Government officials are also looking at adding up to 4.88 million square feet of office space to the sprawling Tunney’s Pasture campus, which currently has about three million square feet of space, as part of a 25-year master plan.

“At some point, Tunney’s Pasture is going to be redeveloped, and the thought is they’re going to need a heck of a lot of swing space when that happens,” Mr. Fleming said. “Right across the street is Holland Cross.”

Bruce Wolfgram, a vice-president at Primecorp Commercial Realty, said the building could also be a potential home for some of the tech firms that are moving into the Westboro area.

“There’s a lot of activity in Westboro being planned, so I’m not surprised with 1560 Scott either,” he said, noting Pythian Group is moving into space at a nearby mixed-use complex being built by BridgePort Developments and Fiera Properties.

The Train Yards proposal, which includes a nine-storey structure on Terminal Avenue, would be located next to an eight-storey office building the federal government already leases. The LEED Gold-certified project would add another 160,000 square feet of class-A office space to the 92-acre property, which now has about 270,000 square feet of office space.

The building would be designed by architect David McRobie, who has worked on other components of the Train Yards development.

Ottawa Train Yards president Marty Koshman said it’s too early to give more details about the project, saying only that it “will appeal to office tenants” but has no confirmed occupants yet.

“I can’t really tell you a whole lot right now,” he said. “It’s a very viable leasing option.”

According to the site plan, the project is targeted to open in the fall of 2015, but that isn’t set in stone, said Mr. Koshman.

“It’s a bit of a loose schedule right now,” he said. “There’s a lot of maybes.”

Mr. Koshman said the property is located close to the Queensway and Hurdman Station, making it readily accessible to commuters, with plenty of shopping and a 72,000-square-foot fitness centre nearby.

“All those things are right there,” he said. “We can certainly offer great amenities to employees in that area.”

Mr. Wolfgram said he’s already looked at the site with “at least one client” he didn’t want to name. The project will need “a major company” as an anchor tenant for it to be viable, he added.

Citywide office vacancy rates were up in the first quarter compared with 2013, he noted, suggesting the economy still has a way to go to be completely on the road to recovery.

Still, he said the Train Yards project is close to downtown and has plenty of amenities, making it an attractive option for potential tenants.

“I can certainly say that there’s been interest in that building and the area,” Mr. Wolfgram said. “A few years ago, I would have thought that area would never go, but since then (owner) Controlex has done a fabulous job with the Train Yards retail project to the extent that we’re seeing more interest and larger companies at least willing to consider that area now. People are a lot more receptive to considering that area now than they would have been, say, five years ago.”

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