Feds cancel plans to build mixed-use complex near St. Laurent Shopping Centre

February 23, 2023

Public Services and Procurement Canada recently confirmed it cancelled the bidding process to select a private-sector contractor to redevelop a 26-acre site at 599 Tremblay Rd. near St. Laurent Boulevard.

Already an Insider? 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.

Learn More and Become an Insider

The federal government has scrapped plans for a major office complex near St. Laurent Station as uncertainty swirls over how much space civil servants will require in a hybrid work world. Public Services and Procurement Canada recently confirmed it cancelled the bidding process to select a private-sector contractor to redevelop a 26-acre site at 599 Tremblay Rd. near St. Laurent Boulevard. In an email to OBJ, PSPC said it is “reassessing its options with regards to the future of 599 Tremblay Road and will seek alternative accommodations for client departments and agencies who originally planned to occupy this space.” The feds put out a call in the spring of 2020 for applicants to turn the property near the St. Laurent LRT station into a 1.6-million-square-foot campus with office space for up to 8,000 government workers as well as residential units, retail and commercial tenants and parks. A development application for the massive project was filed with the city that summer. PSPC, which owns the land, planned to partner with a Crown corporation, the Canada Lands Company, to oversee the development. The government proposed to lease back the office complex from the developer over 25 years, with construction targeted to begin in 2022. The feds said they expected employees to start occupying the office complex by 2025 or early 2026. PSPC said it selected five pre-qualified bidders following a request for qualifications. A request for proposals was issued to the bidders in July 2021, with a closing date of Sept. 29 last year. But the department said the process “did not identify a preferred proponent,” prompting it to terminate the RFP and cancel the project “in its current configuration.” The concept plan included 1.3 million square feet of office space. In 2020, PSPC told OBJ the federal government planned to relocate two departments to the new Tremblay Road campus in an effort to “centralize their staff and services from multiple locations throughout the National Capital Region.” But with the feds now shifting to a hybrid work model in the wake of COVID-19, the government is rethinking its long-term real estate strategy. Last year, it announced it was looking to reduce its overall office footprint and sell millions of square feet of aging federally owned buildings in the capital. PSPC told OBJ earlier this month it is “consulting with internal stakeholders, including client departments and agencies, and will make publicly available a list of buildings in the National Capital Region that are being considered for disposal once these consultations have been completed.” Given the overall uncertainty surrounding the commercial real estate market as vacancy rates rise and tenants reconsider their space requirements, local real estate leaders say it’s no surprise the federal government is pressing pause on projects like Tremblay Road. “When you have a fundamental oversupply (of office space), you don’t need to add any more,” said Darren Fleming, CEO of Ottawa-based Real Strategy Advisors. The veteran commercial real estate broker predicts potential further development of other federally owned sites such as Tunney’s Pasture will also “grind to a halt” as the pandemic’s long-term effects on work culture become more entrenched. “I think they’ve got to figure out what they need, and it’s probably unclear,” Fleming said of the feds’ office space requirements. “It just doesn’t make sense to build new space any time soon.” Michael Church, managing director of Avison Young’s Ottawa office, said the feds’ long-term office outlook is much murkier now than it was several years ago when the Tremblay Road proposal was hatched. “This signals to the market that, like everyone else, the government is taking the time to carefully consider its workplace options – to assess what the new normal looks like for employers and employees,” he said in an email on Thursday. The federal government bought the Tremblay Road property, which is located just across the Queensway from the St. Laurent Shopping Centre, from the Ontario Ministry of Transportation in 2009. An Ottawa Sun story in 2012 said the feds were mulling over relocating the headquarters of the Canada Border Services Agency to the site, but that plan never materialized. The CLC held public consultations in 2019 to get feedback on what a mixed-use community there might look like. It said such a project would likely include a mix of “affordable, family-oriented” housing, commercial and retail space and several acres of parkland that could feature playing fields and public art installations. Fleming said the property, with its close proximity to public transit, a major retail mall and other amenities, remains an attractive parcel of land for development. “Maybe it will be years from now, but one day (Tremblay Road) will be a really great site,” he said. “Could we see that space be sold and rezoned to something that could support residential? It wouldn’t surprise me.”