Ottawa’s investment market is expected to surge this year, with a record $1.4 billion of commercial real estate transactions, according to CBRE Ottawa’s National Investment Team. But despite skyrocketing activity in the past 18 months, the downtown office market isn’t realizing its full potential as an urban tech hub.
How Ottawa can position itself as urban tech hub
Tech markets prosper in areas that offer affordability, amenities, like-minded talent and growth for budding companies. Industry discussed how Canada’s capital could fit proximately into this market during CBRE’s first Ottawa Market Outlook event on May 9.
Shawn Hamilton, managing director of CBRE Ottawa, told more than 200 attendees that vacancy rates rising over the past ten years to 10 per cent in Q1 2017, position the downtown area to ‘thrive as an urban tech hub.’ But he questioned whether this vacant space suits the modern tech tenant.
He stated that after Shopify’s recent expansion, tech companies are already the largest tenant in the downtown core beyond the federal government and Crown corporations; however, vacant space in aging B and C Class office product in the central business district will require more repositioning to appeal to tech tenants.
“Ottawa has many of the preconditions for success to be the next great urban tech hub: the most educated workforce in Canada, five post-secondary institutions pumping out new talent, an improving downtown cultural scene, growing transit infrastructure and, most importantly, available and cheap
office space,” he said. “It’s crucial that landlords work closely with the tech community to understand their unique space requirements.”
Tech tenants see the office as an experience, he added, “not just a place their staff gather to complete tasks.” These companies look for collaborative, community-like spaces.
“The tech workforce is perhaps the most mobile out of any industry in history, and if Ottawa can’t provide them with the type of space they want, it will lose out to places like Toronto or Kitchener/Waterloo,” he cautioned. “While the additional investment required to upgrade Class B and C office space might be seen as a risk or landlords, surely the bigger risk is to do nothing and pin all hopes of a growing federal government.”
Top investment year
Nico Zentil, vice-president of CBRE Ottawa’s National Investment Team, was also on hand during the event. He said 2017 is expected to be a top three investment year. He also noted Ottawa’s value in comparison to Toronto and Vancouver, two cities seeing a rapid growth in pricing.
“Investment grade properties in Ottawa, historically one of the most stable markets in North America, provide a 50 to 100 basis point uplift in returns relative to Toronto and Vancouver assets, and that is causing investors to turn a greater critical eye to the city,” he noted.