Ottawa Must Develop Additional Commercial Real Estate or Risk Stifling its Economic Growth
29 May 2019
The city’s office and industrial markets are thriving, but without new capacity Ottawa could become a victim of its own success
Ottawa’s commercial real estate market is firing on all cylinders, with tech and e-commerce driving down vacancy in the office and industrial segments. But the city could impede future economic success by neglecting to develop additional inventory to support commercial growth.
“In every sense, Ottawa is competitive on a global scale,” CBRE Ottawa Managing Director Shawn Hamilton told the Ottawa Market Outlook event today. “The only thing we need now is room to grow, and it is incumbent on all of us to do what we can to help create more. If we do nothing, we risk stifling the growth we’ve worked so hard to achieve.”
Ottawa has seen its population grow by 99,000 in the past five years, with 46,000 jobs added. The city has absorbed 2.1 million sq. ft. of office space in that same time, 88% of it in the past two years alone, pushing vacancy down to 7.5%. Meanwhile, absorption in the industrial market has increased by nearly 2 million square feet, driving vacancy to an all-time low of just over 2%. “Growth is coming from new and dynamic global sources, making for a more diverse local economy,” Hamilton noted.
While the city can be proud of its success, Hamilton expressed concerns regarding Ottawa’s limited commercial space inventories. “The reality is we are approaching the point where low vacancy in the office market is making growth difficult for tenants, whether they’re in the central business district (CBD) or in the Kanata tech hub, where the rate of growth is higher than in the core. Larger opportunities (50,000 sq. ft.-plus) are scarce, with only smaller pockets of space sprinkled around the city.”
By way of short-term solutions, Hamilton is calling on the Department of National Defence to accelerate its vacating of its downtown premises, and that the Federal Government vacate some of its CBD office space and shift into Orleans, closer to its employee base. He further urged Ottawa’s Municipal Government to reduce development charges to spur construction of new office and industrial product.
And Hamilton’s message to landlords: “Build, and if you can’t build, be ready to build so you can shorten the development cycle. We need to be able to deliver space to service the city’s growth and reach our true potential, while limiting the distractions and setbacks that can result from growth.”
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