Public Services and Procurement Canada, which manages much of the federal government’s real estate portfolio, issued a call late last month asking for information on contiguous office space of at least 1,000 square metres (10,700 square feet) that was available for lease in the National Capital Region.
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The federal government is looking at acquiring more real estate in the National Capital Region as it tries to accommodate workers who are back in the office a minimum of four days a week.
Public Services and Procurement Canada, which manages much of the federal government’s real estate portfolio, issued a call late last month asking for information on contiguous office space of at least 1,000 square metres (10,700 square feet) that was available for lease in the National Capital Region.
In the Expression of Interest dated June 10, PSPC said it’s also looking to purchase a minimum of 5,000 square metres (53,800 square feet) of contiguous office space “with no upper limit” on the square footage.
The department also said it is seeking to lease or buy space that is “fully fitted up and furnished with commercial Wi-Fi.” PSPC said lease start dates and durations as well as amenity requirements such as parking and storage would vary depending on its needs.
The department said the proposed space “must be located within the cities of Ottawa and/or Gatineau” and must consist of “whole floors or whole floors and no more than one partial floor.”
PSPC said the Expression of Interest would remain posted until June 30, 2027, adding it planned to start extracting information on proposals on June 30, 2026 — 20 days after the EOI was posted.
“This is not a tender process, nor a request for proposal, but only an inquiry as to the availability of space to lease,” the document added, saying PSPC “will not necessarily invite offers, or lease any space, and may not post any future ads related to this request.”
In an email to OBJ last week, PSPC spokesperson Michèle LaRose said the department “continuously assesses the space needs of federal departments and agencies.” PSPC “prioritizes optimizing the use of existing accommodation, whether Crown-owned or leased buildings,” before considering the acquisition of additional space, she added.
“It is important to note that a lease can support a variety of operational objectives, including a renewal, relocation, or portfolio optimization initiative, and does not necessarily represent a net increase in occupied office space,” LaRose said.
“As part of ongoing and future accommodation planning, PSPC is undertaking proactive real estate market research … to better identify space that could meet a range of federal accommodation needs, including different sizes, locations, and terms. As such PSPC has issued an Expression of Interest (EOI) for available office space that could potentially be leased or purchased in Ottawa and Gatineau.”
The EOI was posted just a couple of weeks before a mandate requiring most federal employees to return to the office a minimum of four days a week kicked in on July 6. Previously, most federal public servants had been expected to work from the office at least three days a week, a policy that had been in place since September 2024.
While PSPC told OBJ in late April the department “does not anticipate any challenges” finding enough room in its existing portfolio for workers who will need to be in the office an extra day each week, some Ottawa real estate executives said they aren’t so sure.
“I maintain they still don’t have enough space,” Shawn Hamilton, a principal at Proveras Commercial Realty, said in an interview last week.
The veteran commercial office space broker noted that PSPC said it planned to start analyzing potential proposals less than three weeks after it issued the EOI.
"That to me seems to signal that there’s more than just curiosity as to what the market holds,” Hamilton said. “When have the wheels of government ever moved that quickly? It could be indicative of a more proactive requirement (for more space) than they might be letting on.
“I think this will lead to them acquiring space — full stop.”
With about 71 million square feet, PSPC is the federal government’s second-largest holder of floor space behind the Department of National Defence. Much of that is office space, and more than half is in the National Capital Region.
But the feds have made a concerted effort to reduce their office footprint in recent years as the pandemic sparked a shift toward hybrid work and the government launched a campaign to make its buildings more efficient.
Co-working sites closing
Now, it appears the pendulum may be swinging in the other direction.
According to various media reports, the feds plan to close co-working sites in Ottawa, Gatineau and other parts of Canada this fall and reallocate the space to federal organizations.
PSPC told CTV Ottawa and the Ottawa Citizen it will close a dozen GCcoworking sites — including four in Ottawa at 171 Bank St., 335 River Rd., 555 Legget Dr. and 110 Place d’Orleans Dr., as well as a site at Promenade du Portage in Gatineau — at the end of September and give the space to federal departments to “meet operational needs.”
The move comes after a number of federal departments, including Global Affairs Canada, said earlier this year they plan to delay implementing the four-day-a-week policy due to a lack of office space.
In addition, the federal government pulled the trigger on two major real estate purchases in the National Capital Region in recent months, and now it is showing renewed interest in leasing more space.
PSPC said in February it agreed to acquire a 14-storey tower at 131 Queen St. from Morguard Corp. for $148.2 million in a deal that’s expected to close before the end of August.
And in April, the Department of National Defence bought two office and industrial properties at 1600 and 1630 Star Top Rd. from Arnon Corp. for $59 million.
Still, Hamilton questioned whether the feds have the financial resources to effectively own and look after more office real estate.
“I don’t know why they’re looking at buying buildings,” he said. “I point to the state of their own inventory across the National Capital Region, which is growing increasingly into the poor and critical condition categories. If they can’t afford to maintain the buildings they’ve got, why are they acquiring more?
“The good news is, if they need more space, there are blocks of space that they can acquire and move into.”
In its second-quarter office market report released last week, Colliers said the feds’ four-day-a-week office mandate is “creating renewed pressure on workspace capacity.”
The real estate brokerage said the recent EOI was triggered by a “mismatch between reduced portfolios and higher attendance” in government office buildings.
“This renewed space requirement could generate additional leasing activity over the coming quarters and help stabilize broader market conditions,” the report added.
Warren Wilkinson, senior managing director of Colliers’ Ottawa office, said if the feds are indeed serious about expanding their real estate portfolio in the National Capital Region, it bodes well for local brokers and landlords.
“You get the federal government with an expression of interest gathering data on 10,000 square feet and above in almost all markets within Ottawa … (it) is only a good thing for the office leasing market.”
