Morguard sells CBC headquarters building at 181 Queen St. to PSPC for $125.3M

March 7, 2024
3:34 PM
ET

Organizations: Morguard Corp., Public Services and Procurement Canada

People: Tullio Capulli

Southern Ontario-based developer and property manager Morguard had owned the 11-storey, 275,000-square-foot office building at 181 Queen St. since it opened in 2004.

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The building that houses CBC headquarters has been sold to the federal public works department for $125.3 million in one of the biggest commercial real estate transactions in Ottawa history. Southern Ontario-based developer and property manager Morguard had owned the 11-storey, 275,000-square-foot office building at 181 Queen St. since it opened in 2004. The company said Thursday that Public Services and Procurement Canada exercised its option under the terms of its lease agreement to purchase the building at fair market value. Morguard said it plans to use part of the proceeds to repay a mortgage worth $57.7 million. Morguard and PSPC officials did not immediately respond to requests for comment on Thursday afternoon. Located between Bank and O’Connor streets, 181 Queen St. is home to CBC’s Ottawa production centre, which includes studios that broadcast CBC and Radio-Canada programming in the National Capital Region. CBC occupies the first four floors of the building. PSPC leases the remainder of the space for the information services directorate of the House of Commons. PSPC owns more than 40 million square feet of real estate in the National Capital Region. Its decision to acquire 181 Queen St. comes less than a year after the department announced it was looking to sell a number of aging properties in the city. PSPC released its disposal list of 10 Ottawa buildings last spring. The list includes notable properties such as the L’Esplanade Laurier complex and the CBC’s former headquarters at 1500 Bronson Ave. A department spokesperson told OBJ last May the decision to put the buildings on the block was part of its “long-term real estate portfolio plan to optimize the office space under our responsibility, lower operating costs and reduce greenhouse gas emissions.” Meanwhile, Morguard remains one of the capital’s largest office owners and managers with a portfolio of more than 3.3 million square feet. Its Ottawa holdings include two other buildings at 131 and 155 Queen St., as well as Performance Court at 150 Elgin St., where Shopify was headquartered until it vacated the building in 2020. The 181 Queen St. transaction marks the second time in the last two months that Morguard has trimmed its Ottawa asset book. In January, the company announced it was selling the 115-room Holiday Inn Express & Suites Ottawa West on Robertson Road as part of a $410-million deal to divest 14 hotel properties across Canada. Morguard’s most recent local acquisitions include a $28.1-million deal in December 2022 to buy a 50 per cent stake in an office building at 215 Slater St. and its $64.5-million purchase of software-maker Kinaxis’s new 163,000-square-foot head office on Palladium Drive in Kanata in the summer of 2022. About 2.5 million square feet of Morguard’s office portfolio is located in the downtown core, and the federal government is its largest tenant. Empty office space in the downtown core continues to be a sore spot for landlords as the feds and other employers increasingly embrace hybrid work. Last week, CBRE said it expects Ottawa’s downtown office vacancy rate to hit a new high of 15 per cent later this year before the market stabilizes. Despite the uncertainty swirling around the office sector, then-Morguard senior vice-president Tullio Capulli told OBJ in August 2022 he remained confident that office space in the nation’s capital – particularly in the downtown core – would continue to be a solid investment for decades to come. “It might take a few years, but I am bullish on the office,” Capulli said. “Most companies are going to try the hybrid (approach) and everything else, but not everybody can work from home. I’m not sure it’s going to work.”