Regional Group has acquired an 18-storey highrise at 150 Slater St., marking the first major sale of a downtown Ottawa office building to a private-sector buyer in nearly three years.
The Ottawa-based firm announced Friday it has purchased the class-A office tower, which has served as the headquarters of Export Development Canada since it opened in 2011, from Manulife Investment Management.
Financial terms of the transaction, which closed on Thursday, were not disclosed.
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It’s the largest deal in Regional Group’s 68-year history and the firm’s first acquisition of a downtown office property.
“It’s a landmark building and a landmark transaction for the company,” Regional Group vice-president of acquisitions Sachin Anand told OBJ on Friday morning.
“We’ve been historically a suburban landlord, especially with regards to our class-A office space. This was a great way to accomplish a downtown ownership strategy, have a best-in-class building, get size and critical mass without having to buy a bunch of buildings. For us, the stars aligned on this being a great entrance to downtown.”
The 477,448-square-foot tower at the corner of Slater and O’Connor streets is fully leased. EDC occupies about 98 per cent of the space on a lease that expires in 2031, and the remainder of the building is leased to ground-floor retailers.
The deal is the second major transaction in recent days involving a downtown office building. Earlier this month, Morguard announced it was selling a 14-storey tower at 131 Queen St. to Public Services and Procurement Canada in a deal that’s expected to close in August.
It’s also the biggest office deal involving a private-sector buyer since the spring of 2023, when Montreal-based Groupe Mach acquired the 27-storey highrise at 160 Elgin St. from H&R REIT for $277 million.
Shawn Hamilton, a principal at Proveras Commercial Realty, said it could be a sign that investors’ confidence in the Ottawa market is rising after a few lean years.
“It’s nice to see somebody investing in the downtown core,” said Hamilton, who was not involved in the transaction. “It shows that somebody is betting heavily on the market growing from the point at which they bought the building.
“I think what will be telling is what price did it sell for and how far off our sort of peak the pricing was. That will be interesting to see.”
Anand said the acquisition goes a “little bit against the grain” of Regional Group’s typical strategy, which has seen the company target slightly lower-tier properties in suburban areas with the aim of sprucing them up and boosting their occupancy.
However, with vacancy rates in the downtown core remaining relatively stagnant over the past few years amid a tepid return to the office, institutional investors have largely stayed on the sidelines.
That lack of competition from pension funds and other national buyers with deep pockets provided a window of opportunity for Regional to jump into the downtown market that might not have been there a few years ago, Anand explained.
“Historically, we do look for (assets with) a little bit of vacancy or distress or something where there’s an ability for us to go and add value,” he said. “The REITs and the (life insurance companies and other institutional investors) kind of being … sidelined, allowed us to step up into an echelon of deal size and building size where normally we wouldn’t be the winner, quote-unquote. The economics of it seem to align with our investment strategy.”
Hamilton said the lack of other potential suitors for 150 Slater, which brokerage firm CBRE had been shopping for Manulife since September 2024, worked in Regional’s favour.
“Given the market conditions now, I’m not surprised” the Ottawa firm closed the deal, he said, adding Regional was “not involved in a great bidding war.”
“They’ve got a fabulous, relatively new and modern building that is built to a high spec with a credit-worthy tenant,” Hamilton added. “I think it’s a very shrewd and extremely well-calculated move on their part.”
Fortuitous timing
Anand said Regional got into the downtown market at the right moment.
“We’re starting to see the signs indicate that … return to office is a thing, and return to quality office seems to be the theme,” he said.
“We feel that we’ve timed it where we bought it at the low (end of the sales cycle), and now we’re going to ride the upswing back. Real estate ebbs and flows through cycles of value, and we feel that we’ve purchased it at a very opportunistic time.”
Hamilton said he thinks it’s no coincidence the deal closed just a few months before federal employees are poised to return to the office a minimum of four days a week starting in July.
“On the heels of the federal government looking to return to the office, with many suspecting that the feds might need more space, all the stars are aligning for a bright future if you’re the investor,” he said. “I would suggest that that’s bringing a sense that normalcy could return to our market dynamics.”
Anand agreed, saying there’s “a lot of pent-up demand” from potential investors looking to make a play in Ottawa.
“I think it’s been people trying to be patient and see where the market goes and get those data comps to figure out what the purchase price should be,” he added.
“I think the private sector needed a couple of private players to show their cards as to what they would pay and what a vendor is willing to accept. I think you’ll start to see a lot of deals that have been quietly getting done in the background actually close this year.”
With the acquisition of 150 Slater, Regional Group now owns or manages more than four million square feet of commercial and residential space in the National Capital Region.
Anand said there could be more deals on the horizon for the company.
“We’re always looking. Now that this one is done, I’m going to have to figure out what’s next for Regional.”
Where are the deals? Big Ottawa office sales remain elusive as investors stay on sidelines
