Pi News –
The slow process of selling the spare federal buildings is testing the patience of politicians and developers hoping to turn them into much-needed housing in Ottawa.
In May, Public Services and Procurement Canada (PSPC) released a list of 10 properties in Ottawa-Gatineau that it wants to download. Eight months later, none of them were on the market.
“I don’t think it’s fast enough,” said Ottawa Center Liberal MP Yasir Naqvi. “I think it needs to happen sooner. We have a real housing crisis in our city and we need revitalization downtown.”
The PSPC said it remains in the “due diligence” phase of the disposal process for all 10 properties. This means completing studies and reports on environmental, heritage and statutory requirements, as well as building valuations.
Developers see great potential in the buildings: some candidates for office-to-home conversions, while demolishing others could clear prime lots for mixed-use.
“I don’t know what the expectations are, but there’s definitely an opportunity there and there would be some willing bidders,” said real estate broker Michael Church, managing director of Avison Young Ottawa.
“We’re all waiting,” he added. “Hopefully it will happen sooner rather than later because there are some issues that we can help resolve.”
Neil Malhotra of Claridge Homes predicts strong interest from developers, depending on when and in what terms the properties are finally commissioned.
“The sooner the better for downtown Ottawa,” he said.
“When you’re in a housing crisis, it’s a long process.”
PSPC ‘working hard’ to accelerate
Graham Hussey, director of housing for Centretown Citizens Ottawa and president of Cahdco, said the not-for-profit sector also wants a piece of these properties.
According to him, the disposal process is very uncertain.
“If there’s a group, a nonprofit or a market developer that’s interested in buying it or turning it into housing, who do you talk to?” he asked.
“Is it the process, the timelines, is it predictable? Because right now, when I ask, it’s not clear.”
Naqvi said he would be more specific in the later stages of the elimination process.
In an emailed statement, the PSPC is “working diligently to identify opportunities to expedite the disposal process,” but warned in May that “it may take several years for due diligence activities and necessary consultations to be completed and disposal to be completed.”
Not fast enough for Somerset County. Ariel Troster, the Jackson Building in the downtown ward, and L’Esplanade Laurier, two sites on the disposal list.
He said developing them could be “very transformative” for his ward. Some could be ready to be converted to rental apartments, while others could become home to theaters or nonprofits, re-energizing a downtown with federal employees working from home.
“I would like to speed up these buildings as much as possible,” Troster said.
“It may take several years to convert,” he added. “So if we’re going to see something built in the next five to 10 years, I’d say it has to happen tonight.”
L’Esplanade Laurier called “an immediate priority.”
Naqvi, Troster, Malhotra and Hussey sit on a task force that released an action plan for downtown revitalization last week. The report calls for “less emphasis on process and more on outcomes”.
It calls for “accelerating the conversion, development and rehabilitation of buildings for housing and mixed use” and zeroing in on L’Esplanade Laurier as an “immediate priority”.
Church said the full downtown block has “absolutely incredible potential,” but there are challenges. The boxy arrangement of the towers means they could not have been residential in their current form.
“The towers are big and square, which doesn’t speak well for light penetration, so it’s not a great candidate for conversion,” he admits. “What’s really interesting is how much it costs to drop it and start over.”
Another property on the disposal list, the Sir Charles Tupper Building near Mooney Bay, is similarly prime and has a more promising location.
“The way it’s set up, it speaks to a purpose-built apartment or affordable housing conversion because it’s long and skinny,” Church said.
“The infrastructure is all right. It’s connected to bike lanes and sidewalks. It’s accessible to transit. It’s easy to get to.”
This process includes “important steps” for public interest, says the deputy
The PSPC must comply with the regulations before demolishing any of these buildings. They require due diligence on indigenous people’s rights, security conditions, physical performance, heritage value and environmental conditions.
It should then consult with other federal departments, as well as provinces, municipalities and local groups to see if they want ownership. The policy also requires notification to official language minority communities.
The PSPC must then develop a business case and dispose of the property fairly, in most cases through public auctions.
“These are important steps,” Naqvi said, “because as stewards of public assets, we want to make sure that the public interest and public interest always come first before it is handed over to a private developer.”
It doesn’t change his impatience.
“We have to take action now. We have to make sure something is happening with these buildings,” he said. “I can’t wait six, seven or eight years before this starts.”
Naqvi is seeing progress on other properties, notably the Canada Lands Company, a Crown corporation whose responsibilities include developing former federal sites. The village of Wateridge, located on a former air force base, is already home to about 1,000 people.
Other Canadian Lands projects have a longer timeline. Construction on the sprawling Confederation Heights site, which includes the Sir Charles Tupper Building, is currently projected for 2027 or later.
Naqvi said that these projects should also be accelerated, even if it is not easy.
“There are technical reasons for the timetables,” he said. “If you look at Tunney Meadows, a lot of those office buildings are still in use. So it’s going to take time until we can find other places for those workers and relocate them.”
Show us the money, says the consultant
The PSPC is responsible for a quarter of the federal government’s real estate holdings, with approximately 6.2 million square feet of office space. More than half are located in the Ottawa-Gatineau area.
Aside from the 10 properties currently on the disposal list, PSPC has not calculated how much of that space is vacant or underutilized.
The Church says the possibilities are beyond Crown-owned buildings such as L’Esplanade Laurier. He also points to space the federal government is leasing, some of which he says is underutilized and could be converted to housing.
About 50 percent of PSPC’s leases expire in the next five years.
According to Naqvi, an ongoing review of the government’s space needs in terms of transitioning to hybrid work should provide more clarity.
“Once that’s done, I think we’ll have a better understanding of whether there are any other surplus properties,” he said.
“My focus right now is on properties that have been identified as surplus properties. That list is done. Let’s expedite the process to get them on the market.”
Troster hopes federal money will be part of the package.
“Conversion is not cheap,” he said. “I don’t think it’s a gift that we have to accept from the federal government without funding to do anything promising with it.”