REAL ESTATE
federal government’s plans for 37 million square feet of office space it owns and leases in the National Capital Region. While the region’s largest tenant has no secret about reducing the amount of space it plans to occupy in the coming years, Hamilton doesn’t think that will spell doom and gloom for local landlords. Many buildings in the feds’ own 19-million-square-foot portfolio are either nearing the end of their lifespans or are in dire need of costly overhauls, he notes, which could create new opportunities for other building owners as the feds seek new homes for workers. In addition, the government has suggested it might put aging, energy-inefficient properties such as L’Esplanade Laurier on the block in the near future, providing potential new avenues for redevelopment in the downtown core. “I think there are real opportunities there,” Hamilton adds. “I think L’Esplanade Laurier is the tip of the iceberg.” As the feds push to hit a target of 75 per cent of their leased properties being carbon-neutral before the decade is out, landlords need to act now to ensure their buildings are eco-friendly, he says. At the same time, owners of buildings with a mix of government and private-sector tenants will have to weigh whether pricey retrofits are worth it if it means passing on those costs to occupants that might balk at paying higher rents. “That discussion hasn’t happened yet, and it’s a discussion that has to happen,” Hamilton says. The feds have also suggested that how government office space will be parcelled out could change dramatically as a hybrid work world becomes the norm. Stéphan Déry, the assistant deputy minister for real or all those who believe Ottawa’s office towers likely invest more money in upgrading HVAC systems property services at Public Services and Procurement are destined to become nothing but hollowedand installing technology such as virus-killing UV Canada, said earlier this year he envisions a future out shells as the city emerges from the systems as they retool buildings for a post-pandemic where workers are no longer required to commute from pandemic, Mike Church has a pile of documents he’d world. “COVID has been an opportunity to reimagine the suburbs to central offices in the core. like to show you. everything.” Déry imagined a scenario in which the feds set up a “Office space is not dead,” says Church, the Shawn Hamilton, vice-president of business “network” of satellite offices across the country, where managing director of commercial real estate firm development at Canderel Group’s Ottawa office, is civil servants can drop in and share space closer to Avison Young’s Ottawa operations. equally bullish on the local office sector’s their homes in the suburbs. As proof, the veteran broker cites the prospects. Hamilton says the “hub-and-spoke” model “makes growing stack of open files on his desk “There’s no reason for us to abandon a lot of sense,” adding it meshes well with urban – now numbering close to two dozen – the optimism that we had going into the planners’ goals of creating more walkable “15-minute that include sale and lease agreements pandemic,” he says. neighbourhoods.” in various stages of completion. Companies were already moving “It allows people to have an option to work from If commercial real estate is no toward a hybrid work model that home, closer to home or at the mothership, which I think longer in demand, Church says, the saw workers split their time between spreads out development across the city,” he says. market has a funny way of showing it. home and the office before COVID hit, Ultimately, Church believes Ottawa’s office market “I think people have finally woken up Hamilton says, and the health crisis will go through “a bit of a transition” as landlords and to the fact that life is going to go on and simply shifted that process into tenants adjust to a post-pandemic world. eventually we’re all going to get back high gear. For example, he expects more and more MIKE CHURCH to (the office) in some fashion,” he The former owners of aging properties will consider says. commercial real estate converting them into residential With the future of the office a broker says when complexes, the approach InterRent hot topic everywhere as employers around the world cornerstone tenants such as the REIT is taking with the 50-year-old grapple with what workspaces will look like postfederal government downsized in the Trebla Building at 473 Albert St. pandemic, Church and other local industry observers past, other clients such as Ottawa’s But he’s not buying the prediction say that while office space is here to stay, it will likely burgeoning tech startups picked up of Shopify CEO Tobi Lütke, who be configured very differently once people start the slack. He believes history will repeat declared “office centricity is over” when returning to their cubicles. itself this time. he announced early in the pandemic that As an example, Church points to a client that initially “I think having some space freed the e-commerce giant was moving to a planned to ditch a hefty portion of its office footprint up by the federal government is virtual-by-default work model. SHAWN HAMILTON before deciding to retain it all and redesign it to allow uncomfortable because it challenges “I think at the end of the day we’re for greater physical distancing and other health and our comfort zones, but I think it creates going to be leasing probably the same safety measures. oxygen for the private sector and the urban technology amount of office space,” Church says. “It’ll just get “The use of office space is going to evolve over sector to thrive,” Hamilton says. configured differently. This, ‘Oh, we’re going to lose 50 time,” explains Church, adding that companies will Indeed, the industry is keeping a close eye on the per cent of it’ – not a chance.”
Office space is not dead, and other bold predictions
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obj.ca OTTAWA BUSINESS JOURNAL
