A two-property office/flex space portfolio which includes significant future development potential is for sale in the west-end Ottawa tech node of Kanata North.
Marketed by Cushman & Wakefield’s Ottawa office, the properties at 415 Legget Dr., and 2700 Solandt Dr. comprise a two-storey, multi-tenant office/flex building of 194,662 square feet and a total of 18 acres of property. Future development potential could increase the amount of leasable space by an additional 425,000 square feet.
The 11 and seven-acre parcels of land are contiguous, and could be sold separately or as a portfolio. If sold together, they could accommodate up to 620,000 square feet of total leasable space.
Cushman & Wakefield associate vice-president Scott Brooker was not able to identify the vendor, but RENX has learned it is Regional Group, an Ottawa-based developer, owner and property manager.
Currently the 2700 Solandt site includes a parking area for the 415 Legget office building, but is otherwise not developed.
Few Ottawa office properties on market
In a market where there has been very little office product on the market since the advent of the COVID-19 pandemic more than 15 months ago, the property is attracting interest from a wide variety of potential investors.
“It’s certainly a big range, we are certainly seeing all investor types look at this type of market,” said Brooker, who did not want to get into specifics citing the ongoing marketing process.
The property is one of very few which has been marketed in the National Capital Region since the onset of the COVID-19 pandemic.
Brooker and Cushman & Wakefield have been involved in a couple of office sales since the onset of the pandemic, including the class-A 240,000-square-foot 395 Terminal Ave., sale to a BentallGreenOak fund for $97.5 million in May 2020. That deal had largely been in place prior to COVID, but closed during the first major lockdown.
Brooker also cited the sales of 81 Metcalfe St. late in 2020 (Marlin Spring bought an interest in the 57,000-square-foot, 12-storey class-A tower), and 2220 Walkley Rd. Earlier this year, (Jennings Real Estate bought the 87,000 square-foot campus, on 7.4 acres).
“For groups that are out there looking for office property, the supply of available office in Ottawa certainly has been limited,” Brooker said. “A little bit more is starting to come to market, which has been good.”
The Ottawa office sector
The Ottawa office sector, like others across the country and internationally, has faced considerable uncertainty during the pandemic due to lockdowns, work-from-home trends and other factors.
While no one yet knows how this will ultimately affect the suburban Ottawa market, Brooker said the rollout of vaccines and the prospects of finally getting the pandemic under control is leading to more activity.
“Office has certainly picked back up, I think, across the board,” he said. “From an investment standpoint, groups are starting to take another look at office now and say ‘How does it fit into the portfolio?’ and trying get ahead of whatever the curve is that’s coming.”
The city’s office market has seen increasing vacancy, most of it attributed to an increase in sublease space and a major vacancy left by e-commerce giant Shopify, which has shifted its Ottawa headquarters from one downtown office tower (150 Elgin St.) and consolidated in a larger, newly refurbished high-rise at 151 O’Connor St.
Ottawa’s city-wide office vacancy rate was at 10.6 per cent according to Cushman & Wakefield’s Q1 2021 MarketBeat report. The Kanata submarket was at 10.9 per cent.
“The momentum seems to be picking up there (Kanata) faster than other markets,” Brooker said. “So while some tenants may have done some short-term stopgaps through COVID, activity appears to really be picking up. Tenants are getting back at it.
“My opinion is a lot of tenants are looking forward now as the vaccines get rolled out to consider what a more robust return to the office is going to look like and make plans for that.”
He expects to see more investment activity in the coming months in Ottawa and in other major office markets.
“The market velocity is picking up both on the leasing side and the investment side. When we talk to our colleagues nationally and investors nationally, there is certainly a lot more optimism and enthusiasm out in the market,” he said.
“I think we’ll see a lot more deals happening over the balance of 2021 and into 2022.”