May 31, 2006

Ottawa Profile

It’s a mini building boom

Shortage of office space spurs more construction

KORKY KOROLUK

correspondent

OTTAWA

There isn’t much publicity about it, but Ottawa’s construction sector is in the midst of a mini building boom.

There is no single project under way that is big enough to dominate the sector for a couple of years. But the amount of work in the downtown core is readily apparent from the number of construction cranes on the skyline.

It could get busier. With the Class A office vacancy rate in the core area low and getting lower, developers can be expected to jump back into the office market with both feet.

“I’d say that they’re all dusting off their plans,” said David Chorney, managing director of Colliers International’s Ottawa office.

“It’s not going to take long before the space we’ve got reaches a critical point. And at that point, you have to build.”

Market surveys always vary somewhat, but those conducted by major real estate companies are close: Colliers shows a vacancy rate in Class A downtown buildings of 2.8 per cent. CB Richard Ellis says it’s 2.7 per cent. And J. J. Barnicke weighs in with 3.2 per cent.

The largest downtown office project at the moment is the third phase of Oxford Property’s Constitution Square which, when completed in mid-2007, will bring another 350,000 square feet to the core area. The problem is that the International Development Research Centre, a Crown corporation, has already signed for 150,000 square feet. Of the remaining space, some smaller blocks are gone, and the rest is not likely to stay on the market long.

Elsewhere in the core area, Morguard Trust has a mixed office/residential tower nearing completion, but the office portion is already leased. In the Byward Market district, a smaller building is almost finished, with half its 50,000 feet already leased.

And on the western edge of the core area, an 11-storey, 242,000-foot building will be finished late this year. A lot of the space in it has been taken by Adobe Systems Ltd.

There is also a generous scattering of other work either under way or starting soon, including a 110,000-foot expansion of the Rideau Centre, a shopping complex owned by the Viking Rideau Corp.

Work continues on the rehabilitation of the Canadian Museum of Nature, a century-old, un-reinforced load-bearing stone structure. PCL is handling the job, which includes extensive work on the foundations, structure and the envelope.

And lovers of chamber music are still hoping a new concert hall will be built in the downtown core as home to the city’s annual chamber music festival, which is now billed as the world’s largest.

It would be a $27-million, 925-seat facility built as part of a larger commercial/residential development. The city and provincial governments have pledged $6.1 million and $6.5 million respectively to support the project, but whether it goes ahead or not may depend on a similar amount from the federal government. To date, there has been no federal reply to the request.

East of the core area, the biggest job by far is expansion of Montfort Hospital, just now getting under way.

EllisDon was recently awarded the contract for the $250-million job, which will double the size of the hospital. It involves construction of two new wings and renovation of existing facilities. It will result in improved intensive care units, mental health, ambulatory care and emergency services.

There will also be an additional facility for treating members of the armed forces, funded by the federal government.

The work is to be completed in 2009.

Farther east, the bedroom community of Orleans is struggling with a problem that ultimately faces such communities: As residential growth has exploded, expansion of the job base has not kept pace.

“We still run into this battle in which people hop into their cars every morning to go to work — in some other part of the city,” said Peter Stewart, executive director of the Orleans Chamber of Commerce.

“...we could probably fill up three office buildings with small (tenans).”

Peter Stewart, Orleans C of C

What had originally been a small rural village had grown to about 50,000 people by the mid-1980s. That total now is up to more than 100,000, and while there has been a lot of retail growth — mostly big-box stores — in the last few years, there has been almost nothing built in the way of office space.

“We’re trying to get some of the developers to look at the problem, but they need a large tenant to get the financing and start construction. We don’t have any large tenants, but we could probably fill up three office buildings with small ones.”

One project likely to proceed next spring is an arts centre to be built as a P3. The private-sector partnership consortium is made up of such well-known firms as Aecon Buildings, Johnson Controls and Lemay & Doyle Architects, all of Toronto.

The consortium’s proposal calls for a first phase which will include a 500-seat theatre, a smaller studio theatre, a gallery and studio space for visual and multi-media artists. Later phases (to be completed by 2009) include, among other things, a hotel and a seniors’ centre.

The total cost of the project is expected to be somewhere around $170 million.

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