Vacancy rates for office buildings in downtown Ottawa have reached an all-time high, according to a recent report.
Commercial Real Estate Services (CBRE) has been measuring commercial real estate use across the country since 1996.
In a recent report, CBRE found vacancy in downtown Ottawa had jumped from 13.2 per cent in the previous financial quarter to 15.1 per cent in the latest — the city’s highest rate on record.
Louis Karam, managing director of CBRE Ottawa, said the record is noteworthy but not necessarily cause for alarm.
Karam said businesses in the city are still seeing more occupancy than most major Canadian cities.
The report showed Ottawa is below the national average of 18.9 per cent vacancy. Its vacancy rate is also behind Toronto at 15.8 per cent and Calgary at 31.5 per cent.
On a national scale, the report cited a mix of recent economic changes as reasons for why businesses are reducing the size of their downtown offices or commercial footprints.
“Canadian office markets are grappling with a perfect storm of a recession threat, interest rate hikes, tech sector weakness, tenants rightsizing and new supply of office space,” the report read. “All of this is compounded by the continued uncertainty around remote work.”
The L’Esplanade Laurier complex is among a list of nine buildings in Ottawa the federal government said in May it’s interested in selling or transferring. (Andrew Foote/CBC)
Ottawa faces unique challenges
While not exempt from those changes, Karam said Ottawa is facing its own unique challenges affecting commercial real estate downtown.
Public Services and Procurement Canada (PSPC), which manages real estate for the federal government and federal agencies, is the largest commercial tenant in Ottawa.
But, Karam said, that may soon change.
“PSPC occupies half of our footprint across our downtown core,” he said. “And they’re looking to reduce [real estate holdings] by 50 per cent.”
He said the effort will reduce rent expenditures and gather income from sales of existing properties.
But Karam said the reductions will take place over a long period and expects the flagging tech sector to rebound in that time.
Downtown occupancy ‘top priority’
Sueling Ching, president and CEO of the Ottawa Board of Trade, said the board has declared healthy downtown occupancy as a “top priority.”
PSPC’s reductions, Ching said, will have a detrimental effect on a city so reliant on the massive workforce of the federal public service.
Sueling Ching is the president and CEO of the Ottawa Board of Trade. (Ottawa Board of Trade)
“We have created a downtown including the businesses that are down there to support that workforce presence that has not been there since the beginning of the pandemic, and has shown no signs of returning,” she said.
A thriving downtown is a matter of utmost importance to everyone in the Ottawa region, Ching said.
“[Ottawa’s downtown] is important to the social fabric, to the ability to attract visitors and business,” Ching said. “Across the country, together, these large metropolitan areas account for over 60 per cent of our GDP.”
Ching said the Board of Trade is asking for greater transparency and collaboration with the private sector as the public service reduces its footprint.
In the meantime, she’s hopeful about the potential for unused office buildings to be converted to residential spaces. With an ongoing desire to build more housing, Ching said, transforming empty downtown spaces is one of a few short-term solutions she would like to see acted upon quickly.
Karam is also optimistic about mixed-use conversion.
Though it’s not always feasible, he said a recent study of some of the older buildings in Ottawa shows the city has a high potential for converting its office buildings.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
