The federal government’s $125-million acquisition of a building at 181 Queen St. accounted for nearly half the value of all Canadian office transactions in the first quarter as investors shied away from big buys amid ongoing economic turbulence, a new report from Morguard says.
Already a Subscriber? Log in
Get Instant Access to This Article
Become an Ottawa Business Journal Insider and get immediate access to all of our Insider-only content and much more.
The federal government’s $125-million acquisition of a building at 181 Queen St. accounted for nearly half the value of all Canadian office transactions in the first quarter as investors shied away from big buys amid ongoing economic turbulence, a new report from Morguard says.
Office property sales in Canada’s largest markets totalled $282.8 million in the first three months of 2024, the Toronto-based real estate firm said in its latest quarterly update and economic outlook released this week.
That’s the lowest quarterly level of investment in Canada’s office market in seven years.
Morguard cited the “combination of the rising cost of debt, increased economic uncertainty, and the subsequent widening of the gap between vendor and purchaser acquisition pricing expectations” for the slowdown.
“Investors increasingly looked for pricing adjustments to offset increased real estate risk and higher financing costs,” the company said in its report. “Often, vendors were unwilling to meet the pricing objectives of buyers when disposing of assets, despite increased downward valuation pressure.”
Public Services and Procurement Canada made the biggest buy of the quarter, purchasing the Queen Street building that houses CBC headquarters from Morguard for $125.3 million, or $463 per square foot.
That nearly matched the total value of all other office transactions in the five major Canadian markets – Greater Vancouver, Calgary, Toronto, Ottawa and Montreal – that Morguard surveyed.
The office market’s struggles mirrored those of other major asset classes in the first three months of 2024.
In all, just under $2.6 billion worth of commercial real estate investments were recorded in the five markets, according to Morguard, which looked at transactions valued at $10 million or more. That represented a 55 per cent drop from the previous quarter and a four-year quarterly low.
