An uncertain return-to-office mandate and looming layoffs in the federal civil service mean downtown Ottawa retail properties are becoming more difficult than ever to fill, market watchers say.
Already a Subscriber? Log in
Get Instant Access to This Article
Become an Ottawa Business Journal Insider and get immediate access to all of our Insider-only content and much more.
- Critical Ottawa business news and analysis updated daily.
- Immediate access to all Insider-only content on our website.
- 4 issues per year of the Ottawa Business Journal magazine.
- Special bonus issues like the Ottawa Book of Lists.
- Discounted registration for OBJ’s in-person events.
An uncertain return-to-office mandate and looming layoffs in the federal civil service mean downtown Ottawa retail properties are becoming more difficult than ever to fill, market watchers say.
“The Ottawa market downtown has been a tough one for a number of years,” retail expert Bruce Winder told OBJ on Thursday.
“The problem is that, although there are return-to-office mandates, there’s also significant layoffs planned at the federal level in the public service. This is probably a case where retailers and companies are a little hesitant to invest because there’s a lot of uncertainty in terms of consumer spending.”
Foot traffic isn’t what it was prior to the pandemic and, while it has improved as workers return to in-person work, Winder said civil service layoffs would mean another round of changes to the area’s demographics and economics, with fewer people spending and people generally spending less.
“A lot of Canadian downtowns have been struggling and that’s why government officials, banks and large companies have mandated workers back full-time, to try to stimulate downtowns,” he said. “Suburbs have been doing well as people work from home, but it’s something that’s going to be tough. A number of retailers need to invest at the same time to rebuild an area and right now I’m not sure there’s been progress made.”
On Wednesday, real estate firm CBRE released its H2 2025 Retail Rent Survey, which found that investors are hesitant when it comes to Ottawa’s downtown properties.
“Suburban markets continue to captivate tenant interest as demonstrated by low vacancies and high rents,” the report said. “The downtown core of Ottawa meanwhile continues to struggle with vacancies. National tenants are hesitant to invest in the core until there is a stronger return-to-work commitment by the Federal Government.”
According to the report, the city’s retail market overall is seeing movement. High-quality properties of 750 to 3,000 square feet are receiving multiple offers while landlords demand high rents and minimal inducements. And a host of new inventory is expected to come online over the next few years, with those developments expected to lease more quickly and easily, depending on market demand, according to the report.
But long-term vacancies, Winder said, will remain challenging to fill.
“The public has forgotten about (those properties),” he said. ‘There’s usually a reason why it hasn’t been touched in three or four years. It’s usually in an unfavourable location, it doesn’t have enough traffic going by or the other stores near it don’t match the brand. Or there are significant social issues and shoppers don’t feel comfortable in the area.”
The cost of rent aside, Winder said some properties can be expensive to take on, even if they haven’t been sitting empty for long. Vacant properties and larger properties such as former Hudson’s Bay locations may require extensive repairs and upgrades, he said, and investors often aren’t willing to take the risk.
“The escalators might not work well. The air conditioning needs an overhaul. You put a lot of money into the property to make it worthy of opening,” he said. “That might just not make sense from a number standpoint, especially with so much uncertainty around (consumer) spending.”
