Pending balanced budget spells opportunity for Ottawa

By Robert Frank

“The shovels are in the ground,” enthused Ottawa Real Estate Forum chairman Nathan Smith. “These are certainly exciting times in the National Capital.”

The city is coming to the close of more than two-and-a-half years of federal austerity at the same time as it embarks on a $2.1 billion light rail project,” said Cushman & Wakefield’s senior vice president, capital markets. “There’s already a buzz in downtown—as well as some traffic jams.”

Smith observed that the downtown downturn to date, has not been as dire as forecast.

“Our small industrial market remains Canada’s leader in vacancy and net rental rates, and we expect continued growth in tech as well as in one of North America’s top retail real estate markets,” he added.

“The federal government eliminated 15,000 jobs, which had a direct effect on vacancies,” Smith said. “With Finance Minister Flaherty’s commitment to balance the budget by 2015-2016, those cuts will certainly come to an end.”

“Overall vacancy has edged up a bit in all markets,” he reported, “and has certainly moved away from the all-time lows that we experienced during the past few years.”

“Many investors have been in the Ottawa market for quite some time, are familiar with federal influence on market dynamics, and are already looking for opportunities as we move toward the end of the cutback process.”

Meantime, private developers will continue to respond to the federal government’s needs.

“The next big project will be some form of redevelopment of Esplanade Laurier, once its tenants move into 90 Elgin,” Smith predicted.

More opportunities, he said, are just over the horizon.

“With the conclusion of federal government downsizing, there will likely be occasion for large developers and investors to help out, early on,” Smith concluded, “with opportunities anticipated at Tremblay Road and Tunney’s Pasture.”
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Note: This report appeared on pages 14-15 of the Fall 2013 issue of Canadian Real Estate Magazine.
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