H&R REIT selling One60 Elgin office tower in $277M deal

February 14, 2023
1:44 PM
ET

Organizations: Bell Canada, Crestpoint Real Estate Investments Ltd., Crown Realty Partners, Gowling WLG, H&R REIT, Morguard Corp., Public Services and Procurement Canada, Telesat

People: Michael Swan

At one million square feet, One60 Elgin – which opened in 1971 and was formerly known as Place Bell – is the fourth-largest office building in Ottawa and one of the city’s most widely recognized downtown landmarks.

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One60 Elgin, a 27-storey highrise that has dominated the Elgin Street skyline for more than 50 years, is being sold for $277 million in one of the largest commercial real estate transactions in the city’s history. Toronto-based H&R REIT confirmed in a statement Monday night announcing its fourth-quarter financial results that it has reached an agreement to sell the marquee class-A office tower at 160 Elgin St. to an undisclosed buyer. The company said the transaction is expected to close in April. At one million square feet, One60 Elgin – which opened in 1971 and was formerly known as Place Bell – is the fourth-largest office building in Ottawa and one of the city’s most widely recognized downtown landmarks. According to H&R REIT’s website, the building is currently 97.5 per cent occupied. Its largest tenant is Bell Canada, which owned One60Elgin until 1998. Other major lease-holders include Public Services and Procurement Canada, satellite equipment giant Telesat and law firm Gowlings. H&R REIT acquired the building from previous owner Trizec Properties (then known as TrizecHahn) in 2001 for a reported $21.1 million. The highrise underwent an extensive renovation between 2015 and 2017, when it was renamed One60Elgin. The pending sale marks the biggest commercial real estate transaction in Ottawa since Place de Ville was acquired by Crestpoint Real Estate Investments and Crown Realty Partners for $350 million in November 2021. It’s the third-largest deal overall after the Place de Ville transaction and the $480-million sale of Constitution Square in 2017. H&R REIT did not immediately respond to requests for comment from OBJ. The transaction comes at a tumultuous time for the local commercial real estate industry as macroeconomic headwinds and changing work trends accelerated by the pandemic threaten to put a damper on sales activity. Ottawa’s office vacancy rate rose to 11.1 per cent in the fourth quarter of 2022 – more than four percentage points higher than it was in late 2019, before the pandemic triggered a dramatic shift to remote work that hollowed out office towers across North America. And while the capital’s commercial real estate market has seen record transaction levels in recent years as investors sought comfort and stability in the region’s government-based economy, some industry observers suggest rising interest rates and persistent high inflation could cause potential buyers to press pause on big-ticket purchases. Still, veteran real estate executive Michael Swan, Morguard’s Ottawa-based assistant vice-president of property management and office and industrial leasing, recently told OBJ that class-A buildings remain coveted assets in the nation’s capital, particularly in the downtown core. One60 Elgin, with its roster of stable government and private-sector tenants and comparatively low vacancy rate, would seem to be an attractive addition to an investor’s portfolio. H&R REIT’s only remaining holding in Ottawa is a 118,500-square-foot property at 1880 Innes Rd. in Orléans occupied by home improvement retailer Lowe’s.