Feds signal potential interest in resuming growth in downtown Ottawa office market

Downtown

After spending several years working to reduce the federal government’s presence in downtown Ottawa, Public Services and Procurement Canada is hinting it may be open to resuming its growth in the city’s central business district.

In the first quarter, the federal government published a request for landlords to express their interest in leasing out 58,125 square feet of downtown space between Albert, Elgin and Bank streets.

The lease would commence in February 2020 and run for a decade.

While the federal government may ultimately choose not to follow through on leasing the space, the notice caught the eye of some brokers in Ottawa’s commercial real estate industry.

In its first-quarter office market report, real estate services firm CBRE said the notices could possibly signal “a return to a growing federal government presence within the core.”

For much of the 2000s, the city’s central business district had one of the tightest vacancy rates in the country in large part due to the federal government’s demand for space.

However, the market began to loosen up several years ago as the Conservatives cut spending and federal officials reduced the public sector’s downtown footprint by moving civil servants into buildings elsewhere in the National Capital Region, such as the Ottawa Train Yards.

CBRE reported that the downtown office market ended the first quarter with a vacancy rate of eight per cent, down from 8.75 per cent at the start of the year.

The tightening was driven by tech-sector leasing, namely Telesat taking 75,000 square feet of space at 160 Elgin St. and SurveyMonkey leasing 50,000 square feet at 200 Laurier Ave. W.

Overall, the downtown market recorded positive net absorption – the amount of space leased by tenants minus the space vacated – of 299,485 square feet, the highest level recorded since the fourth quarter of 2011, according to CBRE.