Ottawa has become a leader in office-to-residential conversions over the past few years, according to one local real estate observer.
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Ottawa has become a leader in office-to-residential conversions over the past few years, according to one local real estate observer.
“We’ve seen a number of (conversions) in Ottawa,” Maxime Foucaud, managing director of CBRE Ottawa, told OBJ on Tuesday. “I think we’re second in Canada in terms of conversion.”
Only Calgary, which has had more vacancies as well as more incentive programs to encourage developers to undertake conversions, has outpaced Ottawa, according to Foucaud.
Conversions have a dual advantage, he said. They allow older office space to retire, while adding more residential capacity to the market. Foucaud said both have positive ripple effects on the real estate market as a whole, especially in downtown Ottawa, where more residents could lead to better retail and increased activity.
“I think Ottawa has been proactive, to have more residential downtown,” he said. “The housing crisis is real for every community, but I think we had an opportunity to have more people downtown and support auxiliary services and retail.”
He added, “Not every building is apt for conversion, but perhaps we had more that were well-situated and well-configured. I think a combination of things really pushed us and we had developers who had the vision to do it.”
According to its recent report on the fourth quarter of 2025, CBRE said Ottawa’s office market recorded a negative net absorption of 497,600 square feet in office space, leading to a slight increase in the overall office vacancy rate from 12.8 per cent to 13.2 per cent.
Despite the increase, Foucaud said the city’s office market is stable heading into 2026. And in addition to return-to-office plans in both the private and public sectors, Foucaud said Ottawa has gotten good at handling empty buildings.
“If you have a larger building that’s fully vacant, that’s not necessarily a detriment,” he said. “You have the ability to retrofit. It’s an opportunity to do something different with your building. You could stay an office, or you could attract a whole new tenant base.”
A number of conversions are underway or have been proposed across the city.
An office building at 495 Richmond Rd. was recently confirmed for conversion to residential with 143 units.
In the downtown, Ottawa engineering firm Novatech has submitted an application to convert a six-storey office building at 240 Bank St. into residential, with 45 units and 183 square metres of ground-floor retail. Nearby, at 396 Cooper St., Mortar Land Development Consultants has proposed converting a four-storey office building into 33 residential units, while retaining 300 square metres of existing ground-floor commercial space.
KTS Properties filed a plan last year to turn an eight-storey, 55,000-square-foot office building at the corner of Bronson and Carling avenues into a 70-unit rental complex with ground-floor retail space.
Other companies with conversion projects in the pipeline include CLV Group, which is gutting the Narono Building at 360 Laurier Ave. W., and District Realty, which is redeveloping an 11-storey office building at 200 Elgin St. into a multi-residential complex.
East of Bank Street, District Realty is currently redeveloping an 11-storey office building at 200 Elgin St. into a multi-residential complex.
Ottawa market in good position to grow in 2026
According to Foucaud, Ottawa’s negative net absorption in office space is in part a result of multiple “large block vacancies” hitting the market to close out the year, including 33 Laurier Ave. W., 365 March Rd. and 1 Chrysalis Way.
“It’s just reflective of the newer reality of the market,” he said. “We’ve had a right-sizing of the space. When large blocks come, it does impact considerably.”
Despite the overall vacancy rate increase, Foucaud said market conditions are expected to rebound.
“We’re hopeful that 2026 provides a good, stable ground for growth for Ottawa in the office sector,” he said. “(The increase) is not concerning. The Ottawa market is in a good position and has increased since 2019, 2020. We have a strong base and we’re in some ways anchored by the federal government, which provides a somewhat stable commodity that doesn’t allow for rapid fluctuations.”
While there are still questions around what the federal government plans to do with several of its buildings across the city, Foucaud said stakeholders are expecting clarity about a return-to-office strategy and updates on the real estate portfolio in coming weeks.
Since the feds are the city’s biggest tenant, that information will have a major impact on the office market.
“There is quite a lot of movement from the federal government in terms of announcements and there has been for some time,” he said. “The last one would be at the Mayor’s Breakfast with Prime Minister Mark Carney, where (Carney) hinted at an announcement shortly, without necessarily indicating a precise declaration of what that would look like. Once that is announced, we really will have a clear indication of where the market is going.”
Regardless of the details, he added that while the government does want to shed space, “they do still require a lot of space, especially when you look at their workplace policy. It basically allows for ‘hotelling.’ That could mean an increased amount of space is required.”
A 2026 rebound in the market could also be supported by lessened economic uncertainty. Foucaud said Ottawa often follows the trends of large markets and could mirror the momentum seen recently in Toronto’s office sector.
Outside of the downtown core, Foucaud said the suburban office market has seen positive trends, with businesses looking for space outside the core. Investment in public transit, he said, has driven growth in some areas. The suburban office vacancy rate ended 2025 at 11 per cent, versus 15.9 per cent in the downtown, according to the CBRE report.
“Growth in subdivisions in Ottawa, like Barrhaven or Stittsville, over the last few years is definitely promoting activity,” he said.
“The market in Kanata doubled, with the added layer that it has always been tech-based. The Nokia development is driving real growth and they’re building brand-new. That kind of investment from an international company is what we want to see in this market.”
