The head of a property management firm that just acquired a well-known office complex near the Westgate Shopping Centre says the Carling Avenue corridor has the “hottest real estate in Ottawa” amid a wave of commercial and residential development.
Ottawa-based Domeron purchased the six-storey building at 1335 Carling Ave. from Montreal’s PRO Real Estate Investment Trust for $11.3 million earlier this month.
Ron Domitrovits, the president of the family-owned local real estate firm, told OBJ this week the opportunity to add a property along a busy traffic artery that appears poised for more major construction projects was too good to pass up.
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“The timing was just perfect,” he said. “It was one of these things where all the stars started to align.”
Built in 1975, the 69,551-square-foot office building is located just west of the Westgate Shopping Centre. Its tenants include security firm Securitas Canada and real estate brokerage Royal LePage.
The building was 81 per cent leased before Domeron acquired it, but Domitrovits estimated that figure is now closer to 90 per cent with the addition of some new medical and professional services tenants. He expects the building to be fully occupied by the end of the year.
It’s the biggest real estate deal yet for Domeron, which has been in business for about 40 years.
Domitrovits said 60 per cent of his firm’s portfolio, which now exceeds 200,000 square feet, is office space and the remainder is retail. Most of its properties are located in the city’s west end in neighbourhoods such as Bells Corners.
Domitrovits said he’s particularly excited about the long-term prospects for 1335 Carling Ave.
Most of the building’s tenants are smaller medical and professional services users that occupy between 2,000 and 4,000 square feet of space – a tenant profile Domitrovits described as his company’s “sweet spot.”
The six-storey property is in “very good shape,” he said, adding Domeron plans only minor cosmetic improvements, such as replacing the windows over the next two years.
“They’ve added on the right features to keep this building going for another 20, 30 years,” Domitrovits said of the previous owner. “There’s no reason why it couldn’t.”
While the deal also includes additional land that could be ripe for development in the future, Domitrovits said he’s not thinking that far ahead.
“Right now, our main focus is to keep the tenant base that we have in good standing,” he explained. “We’re very optimistic that it’s going to be a nice, stable asset for quite a few years.”
The veteran real estate executive is also bullish on the future of the Carling Avenue corridor, which is undergoing a significant transformation as the area prepares for the arrival of light rail in the coming years.
Next door to 1335 Carling Ave., the Westgate Shopping Centre is being redeveloped with mixed-use residential and commercial towers as part of mall owner RioCan REIT’s effort to reinvigorate its mid-tier retail properties that have been hit hard by the growing trend toward online shopping and changing consumer buying habits.
A few kilometres farther west, the Carlingwood Shopping Centre was acquired earlier this year by a pair of national real estate firms that plan to launch a new wave of residential development at the 30-acre site that is now home to the city’s fifth-largest mall.
Meanwhile, the former Canadian Tire store at 1660 Carling Ave., just west of Domeron’s new acquisition, has been converted into an upscale fitness centre that is slated to open later this year.
“I call (the neighbourhood around Carling) the hottest real estate in Ottawa,” Domitrovits said. “There’s lots of activity. You drive down that portion of Carling Avenue now, and it’s very much changed.”
The property was one of two buildings Proreit sold to local investors this month. Ottawa-based Inside Edge Properties acquired its six-storey office complex at 2 Gurdwara Rd. for $15.3 million.
In a news release late last week, the Montreal firm referred to both buildings as “non-core” assets.
Graeme Webster, a principal in Avison Young’s capital markets group who helped broker both transactions, said “well-located suburban assets with strong fundamentals” such as 2 Gurdwara Dr. and 1335 Carling Ave. are drawing attention from local buyers as REITs and larger institutional owners look to dispose of buildings that no longer fit their portfolios.
“(Private-capital) investors really see this as an opportune time,” he said. “I wouldn’t normally expect to see this much office activity, but it’s been good.”
