Real estate: What’s the buzz?

BY DAVID SALI

david@obj.ca

Ottawa’s inventory of vacant industrial space is “dangerously low,” a recent report from Colliers says – prompting the head of the firm’s local office to warn that large-scale tenants could start looking at properties elsewhere to address rising demand for warehousing and storage facilities.

The capital’s industrial availability rate – that is, the total amount of space available directly from landlords and via sublease – ticked up slightly from 1.2 per cent to 1.3 per cent in the second quarter, Colliers said in its latest Ottawa industrial market report.

But that’s still more than a full percentage point below the rate from a year ago and just off the city’s record-low level from the first quarter.

The space crunch has pushed rents ever higher as prospective tenants have few options but to pay what landlords are asking in an overheated market. After decades of relative stability, demand for space in Ottawa’s industrial real estate market skyrocketed during the pandemic as the National Capital Region suddenly became the place to be for e-commerce distributors such as Amazon that were looking for easy access to 400-series highways to quickly and cheaply transport goods to online buyers in Toronto, Montreal and other large hubs.

But while Broccolini built two mammoth fulfilment centres for Amazon in Barrhaven and on Boundary Road,

soaring construction costs and a lack of industrial-zoned development land, as well as rising development fees and other roadblocks, have hamstrung efforts to further add to the region’s supply, says Warren Wilkinson, the managing director of Colliers’ Ottawa office. And he worries that might force other e-commerce companies that have been eyeing the Ottawa market to look south to markets such as Cornwall and other communities along the St. Lawrence Seaway to meet their growing need for warehouse space. “If we don’t have the size in order to accommodate large industrial users, they’re Warren Wilkinson, managing going to look elsewhere,” Wilkinson says. “If director, Colliers. FILE PHOTO. we don’t start adding supply and builders don’t start building in relatively short order … that’s the threat. That could happen.” Mike Church, the managing director of brokerage firm Avison Young’s Ottawa office, agrees a lack of major warehouses is a definite stumbling block.

Two downtown office towers sold recently for a combined $60 million – a signal that the capital remains a “beacon” for investors looking for a safe haven.

Toronto-based True North Commercial REIT has agreed to purchase an 11-storey office building at 400 Cumberland St. from fellow Toronto firm KingSett Capital for $40.5 million.

OBJ also learned that BentallGreenOak sold a 12-storey building at 77 Metcalfe St. to Montreal’s Groupe Mach for $19.1 million.

The 400 Cumberland St. deal adds a 174,000-squarefoot property that’s almost fully leased to the Department of National Defence to True North’s growing portfolio of properties.

Meanwhile, 77 Metcalfe St. – a 12-storey, 147,000-square-foot building at the corner of Albert Street – changed hands.

CBRE senior vice-president of capital markets Nico Zentil, whose firm helped broker the deal, said the property could attract a variety of tenants.

While certain deals have been “repriced” as interest rates rise and the threat of a recession looms, Zentil said Ottawa remains a highly sought-after market.

“It’s sort of like the beacon in a way,” Zentil said. “I think that will serve Ottawa well.”

— by David Sali

BY DAVID SALI

david@obj.ca

Asenior Morguard executive says the real estate giant is “bullish” on the Ottawa market and hopes to keep expanding its Kanata footprint after acquiring the newly constructed head office of one of the west-end tech hub’s highest-profile companies.

“We are excited about it because it is a brand-new, state-of-the-art building,” Morguard senior vice-president Tullio Capulli said of 3199 Palladium Dr., which officially opened in June and is fully leased to supply-chain software darling Kinaxis – a publicly traded firm that’s emerged as one of the few bright lights in a grim year for most tech stocks.

The bulk of Morguard’s Ottawa holdings – nearly 3.5 million square feet – consists of office space, with about 2.7 million square feet of it located in the downtown core.

About 53 per cent of the firm’s office portfolio is leased to the federal government. While the feds have been coy about their long-term plans for bringing employees back to the office full-time, Capulli said Morguard remains confident that office space in the nation’s capital – particularly in the downtown core – will continue to be a solid investment for decades to come.

“Nobody knows exactly what they need or what’s going on in the office,” he told OBJ. “You just don’t know how it’s going to shake out. But we’re here for the long run.

“It might take a few years, but I am bullish on the office. Most companies are going to try the hybrid (approach) and everything else, but not everybody can work from home. I’m not sure it’s going to work.”

Among Morguard’s best-known Ottawa properties is Performance Court at 150 Elgin St. The distinctive 21-storey, 360,000-squarefoot office tower opened in 2013 and gained instant cachet when rising e-commerce star Shopify signed on as the lead tenant.

But the software giant stunned many in the business community in 2020 when it announced it was going “digital by default” and vacating the 170,000 square feet of space it rented at Performance Court, even though its lease doesn’t expire until the end of 2026.

Capulli said about three-quarters of Shopify’s former footprint has been subleased to other tenants, adding he fully expects the rest of the space to be backfilled in the near future.

“There’s no doubt in my mind,” he said. “Everything in that building is top-notch. I don’t think we have a problem there.”

Capulli said there’s a lot to like about the Ottawa market, whether it’s downtown or in the suburbs. While the central business district “will always have its place,” he sees big upside in sites near transit hubs and along the Queensway such as 3199 Palladium Dr.

“We’re here for the long run,” he reiterated. “The economy is going to go up and down, but we plan on being here for another hundred years.”

hundred years. – Tullio Capulli, senior vice-president, Morguard

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When you’re a casino who’s known for putting their clients first, how can a pandemic help you up your game?

At the Casino du LacLeamy Complex, it was about embracing togetherness for both guests and employees. And it seems to be working.

Lise Sarazin, director of sales and marketing, says the phone has been ringing off the hook to book events at the Hilton Lac-Leamy. “Clients are coming back,” she said. “People really needed to see each other and connect.”

Whether you’re planning a business conference, a wedding or a birthday bash, the Hilton Lac-Leamy is the perfect place to host friends, colleagues and clients alike. And now, both the Casino and Hilton Lac-Leamy are introducing fresh ways to create premiere guest experiences by reimagining what quality, enhanced service looks like.

On top of the usual entertainment, food and amenity offerings, at the hotel, for example, the team will be investing in hi-tech tools that give guests full control of their guest experience, such as smartphone check-in, texting the front desk when you need a new towel, and the ability to order personal spa care and room service at the touch of a button.

The technology isn’t about replacing staff — it’s about giving them time to focus their full attention on guests, so it truly feels like the Hilton LacLeamy is a home away from home, said Sarazin.

The company is also taking a closer look at its sustainability practices, especially when it comes to hosting large events. Four eco-responsible event packages have been designed for clients looking for a greener touch, while the broader organization is implementing IT-waste management programs and food recycling partnerships.

By focusing on creating tailored guest experiences, the Casino du Lac-Leamy Complex is hoping more groups will take the opportunity to gather and reconnect in a way that suits them. A winning team means a winning experience While all of these changes are contributing to an elevated guest experience for clients, one of the major factors that sets the Casino du Lac-Leamy Complex apart is the staff, said Sarazin, adding that the team would have been remiss not to take a closer look at their employee’s experience as well.

Fortunately, strong leadership from hotel manager Mark Labrie is providing an example to follow. “He’ll be in the lobby when it’s busy opening doors and making sure that people are happy,” said Sarazin. “Customer service is in his DNA. He’s leading the way.”

Learning from Labrie has influenced how Sarazin manages her own team. “Since caring for our staff is just as important as caring for our guests, I check in regularly with my team and make sure they have what they need,” she said.

Like many in the hospitality industry, Sarazin said they are still looking to recruit more staff, especially now that business is picking up. But, with a top-notch team and the opportunity to create lasting relationships and experiences for clients, she is confident that they will thrive in this new era of events.