Crown Realty Partners has added four class-A office buildings comprising 415,000 square feet of space, as well as up to 500,000 square feet of future development potential, to its quickly growing Ottawa portfolio.
The Toronto-based investor acquired the Park of Commerce complex of mid-rise buildings in the city’s east end for its Crown Realty V Limited Partnership value-add fund. The transaction is the first for the fund, which raised about $260 million in equity commitments during its initial offering in 2021.
Financial details of the acquisition have not been disclosed.
“We like the Ottawa east node from an office perspective,” Crown managing partner Emily Hanna said in an exchange of emails with RENX. “It offers a value alternative for businesses outside of the core. As well, the ongoing residential intensification in the node will serve to further enhance its value proposition to businesses looking to offer their employees workplace flexibility.”
The Park of Commerce property
Park of Commerce is located at 1400, 1410, 1420 and 1430 Blair Towers Place, just across from the Gloucester Centre shopping mall and along the Hwy. 174 corridor, about a kilometre from the junction with Hwy. 417. The four mid-rise buildings are each seven or eight storeys and feature floor plates of about 15,000 square feet.
Constructed in the late 1980s, the buildings are the “sister complex” of Crown’s first Ottawa acquisition, the Carling Executive Park. Major tenants include PWGSC and the Canadian Medical Association.
Hanna said Crown has plans to improve the LEED Gold and BOMA BEST Gold complex and work to attract new tenants.
“Current vacancy at the complex is 35 per cent and we intend to tackle it with our model suites program, together with an active leasing and capital program that continues to adapt (to) the ever-changing needs of tenants in the marketplace,” Hanna said.
“The majority of upgrades will focus on accessibility improvements and other ESG-focused CapEx, including improvements to the HVAC systems that will contribute to energy efficiency and decarbonization planning.
“We also plan to upgrade the HVAC filtration systems to improve indoor air quality and introduce Fitwel certification that should help support the businesses within the buildings in ensuring the comfortable return of the majority of their team members to the office buildings.”
Opportunity for intensification
In addition to the upgrade program, and in fitting with the fund’s value-add strategy, Crown will explore intensification opportunities. The Gloucester area around Blair Towers Place is already experiencing some residential intensification and is located in close proximity to an Ottawa LRT station.
“The interesting aspect of this acquisition is that the property is located within the TOD (transit-oriented development) zone in the Ottawa East node. The area is rich in amenities, highly accessible and experiencing a significant amount of residential intensification,” Hanna said.
“We believe the excess land associated with this property could accommodate almost 500,000 square feet of residential uses, most likely purpose-built rentals, which will not only complement the office complex but also fit well with the community.
“We will work with our planners to integrate and reconfigure the site and ensure a well-thought-out, mixed-use community, all while focusing on repositioning the office complex.”
Crown’s other recent Ottawa activity
Crown has been very active in Ottawa in the past few months. It recently closed on the 282,000-square-foot IBM-occupied office complex on a six-acre site at 3755 Riverside Dr.
That property was acquired in December for $49 million for its Crown Realty IV Limited Partnership Fund.
Crown has also assumed a share of the management responsibility for the 1.17-million-square-foot Place de Ville downtown office complex.
Crestpoint Real Estate Management Ltd. and Vestcor acquired 50 per cent stakes in the property, which spans a city block, paying $350 million to Alberta Investment Management Corp. (AIMCo), Brookfield Properties and CPP Investments in November.
Hanna said Crown has another acquisition upcoming for the Crown Realty V LP fund, a portfolio within the Greater Toronto Area. The fund will be focused on Toronto and Ottawa.
“We will continue to focus on investment opportunities located within Crown’s core markets of the GTA and Ottawa,” she said. “They remain two of the tightest office markets in North America, with quarter-end vacancy rates of 12.2 and 8.7 per cent, respectively.
“In the case of Ottawa’s office market, which has been relatively stable throughout the pandemic, the overall vacancy rate actually fell this past quarter.
“We have boots on the ground in Ottawa as we do here in Toronto and have long been proponents of that office market, having acquired (about) two million square feet of assets since 2019.”
About Crown Realty Partners
Crown currently either owns or manages about 3.1 million square feet in the Ottawa market.
Crown, which was founded in 2001, is an integrated commercial real estate investment and management firm focused on value-add opportunities across Canada, with approximately $3 billion of assets under management.