Groupe Mach plans to demolish a vacant 12-storey building at the corner of Metcalfe and Albert streets and replace it with a new highrise containing 234 rental apartments and ground-floor commercial space, a company spokesperson told OBJ.
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Another empty downtown office tower is being torn down to make way for residential units as landlords continue to seek new uses for aging real estate assets in Ottawa’s core.
Groupe Mach plans to demolish a vacant 12-storey building at the corner of Metcalfe and Albert streets and replace it with a new highrise containing 234 rental apartments and ground-floor commercial space, a company spokesperson told OBJ.
The 140,000-square-foot tower at 77 Metcalfe St. has been empty since its previous tenant, Nav Canada, moved out at the end of 2022.
Groupe Mach acquired the building from BentallGreenOak three years ago for $19.1 million. The Montreal-based firm said it decided to take the 70-year-old property off the office market and transform the site into a multi-residential complex “based on recent market analyses and the growing demand for housing in downtown Ottawa,” adding it believes “this approach offers greater long-term value.”
Groupe Mach said it aims to start dismantling the structure before the end of the year.
It will be the second demolition project in downtown Ottawa for the real estate firm, which is in the midst of tearing down a 14-storey highrise at 110 O’Connor St. The company said the project is "progressing on schedule,” with the building expected to be completely dismantled by next March.
Groupe Mach acquired that building at the corner of O’Connor and Slater streets, which previously served as an office for the Department of National Defence, from Cominar REIT for $40 million in 2021. It is being replaced with a residential highrise.
A prominent Ottawa real estate broker says it’s no surprise major property owners like Groupe Mach are looking at alternative uses for aging class-B and C properties such as 77 Metcalfe and 110 O’Connor.
“One of the things I think any downtown core starts to struggle with is what to do with inventory that passes its prime and how can you repurpose it,” Shawn Hamilton, a principal at Proveras Commercial Realty, told OBJ on Tuesday.
“I would say this news is very exciting because 77 Metcalfe, it had its run and it contributed over the course of the decades that it was operational, but by today’s standards it is challenged real estate.”
While recently renovated downtown properties such as Constitution Square, the World Exchange Plaza and the Sun Life Centre are luring tenants with perks such as remodelled common areas, gyms, restaurants and other amenities, owners of more antiquated buildings haven’t been as successful at filling vacancies in a post-COVID world.
As a result, Hamilton said, many property owners are looking at ways to breathe new life into their investments.
In some cases, that could mean converting existing office towers into housing. Several local developers, including CLV Group, District Realty and Katasa, have launched office-to-residential conversions over the past few years, and more projects are in the pipeline.
Groupe Mach has taken a different approach, opting to start fresh with brand-new developments. Company president Vincent Chiara told OBJ in 2023 the firm considered a conversion at 110 O’Connor, but ultimately determined it didn’t make financial sense to try to salvage the current building’s skeleton and transform the interior into apartments.
Hamilton said Groupe Mach’s properties likely won’t be the only aging downtown office towers facing the wrecker’s ball in the years ahead.
“I think we’re entering a phase where some of our antiquated stock is ripe to be repurposed and people are willing to invest in the city,” he said. “It doesn't take very many examples to create a trend. I would say definitely it’s the start of something that we should be watching carefully.”
Foot traffic in Ottawa’s core has never recovered from the pandemic, with many employers, including the federal government, opting for a hybrid work model that sees employees come to the office only two or three days a week.
As municipal and business leaders seek new ways to revitalize the city’s downtown, Hamilton says he’s encouraged that Groupe Mach and other landlords are providing more options for people to live there.
“It sort of diversifies our downtown core by bringing in residential (space) where we were sort of a monocultural downtown,” he said. “I see all of this as extremely positive.”
Meanwhile, the federal government’s campaign to shed some of its antiquated office inventory in downtown Ottawa appears to have stalled, with the latest auditor general’s report saying the plan to reduce the overall federal office footprint by 50 per cent over 10 years is well off track.
Hamilton suggested the feds “might want to take a page out of Groupe Mach’s book” and start looking at how to repurpose buildings that have outlived their usefulness as office space.
“(The federal government) could do a lot of good right now, and I don’t feel that they are,” he said.
