Sale of buildings on feds’ disposal list could be ‘several years’ away, PSPC says

disposal list

The sale of aging federal government buildings in Ottawa could still be “several years” away, Public Services and Procurement Canada says, while a Crown corporation that redevelops surplus federal properties says it will look into whether any of the sites on the disposal list could be financially viable as residential conversions.

PSPC released the much-anticipated list of local properties it plans to dispose of last week. The 10 sites include the three buildings that make up the downtown L’Esplanade Laurier complex, the Sir Charles Tupper Building on Riverside Drive, and the 1500 Bronson Building and Annex, the former headquarters of the Canadian Broadcasting Corp.

The federal department said the decision to put the buildings on the block was part of its “long-term real estate portfolio plan to optimize the office space under our responsibility, lower operating costs and reduce greenhouse gas emissions.”

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In an email to OBJ on Tuesday, PSPC spokesperson Alexandre Baillairgé-Charbonneau said the government “continually assesses” its portfolio for factors such as functionality, overall condition, environmental impact and financial performance to identify properties that might no longer be needed.

Baillairgé-Charbonneau stressed that “it is still early in the process” and no sales are imminent. He added that “multiple stakeholders” must be consulted before decisions are made.

The feds must conduct due diligence on potential buyers, he explained, as well as solicit “expressions of public purpose interest from federal departments, agent Crown corporations, provinces, municipalities and Indigenous groups” – a process that could take “several years” to complete.

Employees in buildings that are still occupied will eventually be relocated, Baillairgé-Charbonneau said.

“PSPC is working with other client departments and agencies to develop long-term accommodation plans to address their needs,” he added. “This will be achieved by consolidating our footprint and making better use of the remaining buildings within the portfolio.”

Meanwhile, the Canada Lands Company – a self-financing, arm’s-length organization that buys surplus federal properties and redevelops them into housing and mixed-use communities – says it will help determine how to get the best financial return for the properties.

“Canada Lands Company, as the federal government’s development expert, does have a role to play in federal disposals and will be involved with PSPC in assessing the development potential of these sites,” CLC spokesperson Manon Lapensee said in an email to OBJ on Wednesday.

Real estate leaders have been anticipating the move for some months, as federal office buildings continue to sit empty despite federal civil servants returning to a mix of in-office and remote work.

While some of the buildings on the list, such as the Jackson Building at the corner of Bank and Slater streets, remain fully occupied, others like the Bronson Building are now vacant. They are also in various states of disrepair, meaning their potential to be transformed into alternative uses is in many cases uncertain.

Last week, Ottawa Centre MP Yasir Naqvi told OBJ he’s hoping federal agencies such as the Canada Mortgage and Housing Corp. can provide financial incentives for private developers to convert empty downtown office towers into residences.

Naqvi said the new disposal list “provides ample opportunity to redesign these properties and convert them into affordable and social housing and for community, creative and commercial use.”

However, some real estate insiders question whether it’s worth trying to save some of the properties that are in poorer condition.

“Office building conversions to residential are very complicated,” Claridge Homes chief financial officer Neil Malhotra said in an interview on Friday.

“The bigger the building is, the harder it is to get light in. Realistically, probably the most logical way to get anything done effectively on some of these properties is to look at demolishing them to be able to maximize the potential density and opportunity.”

The federal government says the buildings could be repurposed in a number of ways.

“Disposal of properties to federal, provincial, municipal and community stakeholders and Indigenous Peoples, provides opportunities to generate socio-economic benefits such as affordable housing, redesigned community or commercial space, and meaningful opportunities for Indigenous participation and reconciliation,” Baillairgé-Charbonneau said.

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