Greater Ottawa Area

June 3, 2020 | Canada

As this unprecedented situation continues to rapidly evolve, Avison Young’s briefing notes are intended to provide an up-to-date assessment of the impact on the commercial real estate market.

Period covered: May 16th to 29th, 2020

General trends, news and market observations

  • As of May 18th, businesses began reopening to the “new normal”. The farmers’ market at Lansdowne Park reopened for pre-ordering and pick up at a designated time
  • The City of Ottawa has cancelled event permits until the end of August
  • Some single-purpose properties are now adapting to year-round opportunities. For example, skating rinks are offering their facilities as cold storage for farmers – adaptability is the new normal

Office market observations

  • Crowded public transit is expected to discourage workers and tenants from returning to downtown in large numbers; parking downtown may prove to be difficult. Suburban offices will survive with more abundant parking availability – easier to continue social distancing
  • Shopify, Ottawa’s leading tech company, plans to keep its downtown office closed until next year
  • Office landlords report collecting 90% of rent in May
  • Face rents will likely moderate slightly, coming off their highs of five months past – there will likely be vacancy created by companies downsizing

Industrial market observations

  • Star Motors of Ottawa is expanding to the south end of Ottawa – they have been around since the 1950s
  • Logistical warehousing is being touted as the asset class of choice for investors coming out of the COVID-19 pandemic

Retail market observations

  • Women’s clothing sales were down approximately 90% in the month of April
  • Retailers need an online presence or companies will fall
  • Some Ottawa stores have reopened and welcomed customers, while some remain as curbside pickup only
  • The owners of Merivale Mall are contemplating a redevelopment of the south Ottawa shopping centre to a mixed-use high-rise
  • It is predicted that there will likely be an increase in vacancy and some small chains/mom-and-pops are going under – many will have difficulty in recovering from this pandemic
  • The easing of provincial restrictions on construction gives opportunity for developers to complete retail building plans
  • Some retailers may want changes in rental rates – for example, bringing back percentage rent
  • 50% of rent was collected from strip-plaza retailers in May – a lot of deferrals

Multi-residential market observations

  • Claridge Homes has a lot of optimism for Ottawa’s housing market. The company has plans for a two-building project. It plans to build a nine-storey retirement home and a 21-storey highrise at the former Webb’s Motel at 1705 Carling Avenue
  • Multi-residential financing is the easiest asset class for which to secure long term funding – one of the few bright spots

Investment market observations

  • Ottawa urban boundary expansion – the City’s Agriculture and Rural Affairs Committee voted 10-1 in favour of a balanced approach to expanding Ottawa. 1,350-1,650 hectares of housing and employment lands within the greater city boundaries were added to Ottawa’s urban lands
  • Clients are having trouble financing. Banks are less interested in any commercial properties but more than willing to finance multi-residential assets

For more information please contact:

Amanda La +1 613.696.2731

For more on the virus’ potential #CRE impacts, read the latest briefings on our Avison Young Resource Centre:

The spread of COVID-19 and the containment policies being introduced are changing rapidly. While information in the briefing notes is current as of the date written, the views expressed herein are subject to change and may not reflect the latest opinion of Avison Young. Like all of you, Avison Young relies on government and related sources for information on the COVID-19 outbreak. We have provided links to some of these sources, which provide regularly updated information on the COVID-19 outbreak. The content provided herein is not intended as investment, tax, financial or legal advice and should not be relied on as such.