A soon-to-be-completed but officially unleased office building in Vanier is sowing confusion among the city’s commercial real estate brokers about what’s driving the developer’s decision-making.
Bona Building and Development Co. Ltd. first raised eyebrows four years ago, when construction crews broke ground on the 10-storey structure at 140 Jeanne Mance St., just off Vanier Parkway. The building will eventually feature 273,400 square feet of office space and three levels of underground parking.
What makes BONA’s plans curious is that there is no obvious tenant to fill its new building. Ottawa’s largest tenant, the federal government, continues to downsize and shed office space, pushing up the city’s vacancy rate.
“I look at a building that’s being built in Ottawa on spec that doesn’t appear to have a tenant associated with it and in a market where there’s no private-sector growth and I think, ‘OK, what do they know that we don’t know?’” said Greg Clark, the vice-president and managing director of CBRE’s Ottawa brokerage operations.
He said his firm usually gets notices from developers indicating that new buildings about to come on the market are available for lease.
The fact that CBRE has yet to hear anything from Bona regarding the Vanier building suggests to him that the company is not interested in finding a private company to take over the space, he said.
“They certainly don’t appear to be marketing the building per se, which is what leads me to believe they’re not particularly looking for a private-sector tenant,” said Mr. Clark.
Bona isn’t willing to shed any light on its plans.
Calls to the head of the company, Robert Vocisano, were not returned. A woman who answered the phone at Bona’s offices promised to pass along an interview request but told OBJ he “kind of likes a low profile.”
The mystery surrounding Bona’s plans has left brokers wondering if a public-sector tenant is interested in taking over the space.
But if the federal government does have any intention of moving into the building any time soon, the department that handles most of its leasing is not letting on publicly.
Public Works spokesperson Annie Trépanier said the feds do not have an agreement in place to lease the space.
Nathan Smith, senior vice-president at Cushman & Wakefield Ottawa, said the building still fits with the company’s business model.
“It’s certainly not the first time Bona has built a building or done something on spec and waited for the tenants to show up,” he said. “So it’s not pioneering for them to do this.”
Others believe the space would nevertheless be ideally suited for the federal government.
Quintin Colaiacovo, a broker with CBRE, said his understanding is that Bona wants to lease the building to one or two tenants.
There aren’t that many private companies that would fit the bill, he said, so that leads him to believe the company is planning for further into the future.
“If in 12 to 16 months or 12 to 18 months the feds start growing rather than decreasing their size, then (Bona will) likely be ahead of the curve (of) people trying to apply for permits or start digging the ground,” he said. “They’ll be really fairly ready for whatever comes down the pipeline.”
Finance Minister Jim Flaherty has promised to have the federal government back in a surplus position by the 2015-16 fiscal year.
That’s creating optimism among some in the real estate community that it will once again start snapping up some vacancies in the city’s office market.
For the time being, though, the city’s creeping vacancy rate doesn’t appear ready to hit a high point any time soon.
Ottawa had a vacancy rate of 7.9 per cent during the third quarter of 2013, according to Cushman & Wakefield Ottawa’s most recent market report. That’s up from six per cent a year earlier. The report predicted that would rise even higher before the end of the year.
(155 McArthur Ave.)
Size: 120,000 square feet
No. of storeys: 7
Year built: 1992
Place Vanier, tower A
(333 North River Rd.)
Size: 261,000 square feet
No. of storeys: 17
Year built: 1968
Place Vanier, tower B
(333 North River Rd.)
Size: 237,000 square feet
No. of storeys: 19
Year built: 1970
Place Vanier, tower C
(333 North River Rd.)
Size: 150,000 square feet
No. of storeys: 10
Year built: 1957
(222 Nepean St.)
Size: 119,000 square feet
No. of storeys: 11
Year built: 1967
(Source: OBJ research records)