Saturday, December 4, 2010

UPDATE: Train Yards to build federal office

It has now been officially announced that the Public Works building located at the Trainyards is a go.  This will bring 1000s of jobs to the North Alta Vista area, meaning demand for properties in the area.  PublicWorks is attempting to move employees out of the downtown core and into other areas within the green belt, specifically areas that are withing 600 meters of major transit areas.

Published on December 3rd, 2010
Peter Kovessy
Ottawa Business Journal

A poorly kept secret in Ottawa’s commercial real estate community concerning the location of the federal government’s next office building has been confirmed by Public Works.  The Ottawa Train Yards – a sprawling retail power centre with more than a half-million square feet of retail space over 92 acres – has won a contract that could be worth up to $89 million over two decades to build a new office building.

Train Yards officials were not immediately available to provide details about the contract, which was in response to a request for 25,000 square metres, or approximately 269,100 square feet.  The original solicitation called for space within 600 metres of any Transitway station between St. Laurent station in the north and east and Heron Road station in the south and west.

The Train Yards meets this requirement, but the nearest Transitway stop is the Via Rail station, which is separated from the commercial plaza by train tracks. Currently, Transitway passengers appear to have to exit the train station and walk along Tremblay and Belfast roads to reach the Train Yards – which is served by a local bus route – by foot.

Public Works will pay $199.95 a square metre – roughly $18.58 per square foot – in net rent, which excludes operating costs.  Bruce Wolfgram, a vice-president at Primecorp Commercial Realty, said that right seems a bit high, noting Bentall is marketing space at Blair Place for $17 a square foot.

Additionally, the average asking net rent for existing class-A space in the general vicinity of the Train Yards varied between $13.58 and $18 a square foot at the end of the third quarter, according to a recent report by Colliers International.  Mr. Wolfgram said he suspects the federal government is receiving a certain amount of office space build-out.  “That number must include some incentives. They must be receiving more than just a base building,” he said.

The lease runs for 15 years, with an option for an additional five-year term. The Train Yards will retain ownership of the building during and after the lease term.  The federal government has made it clear for more than a year that it wants to move more bureaucrats out of the downtown core.

In October, Public Works’s top property official told the city’s commercial real estate community in a speech that he wants to vacate 10 per cent, or roughly one million square feet, of the government’s current leased and owned space downtown.

“We want to have access to cheaper space,” said Claude Seguin, who is the director general of portfolio management in Public Works’s real property branch.  In the coming years, the federal government will need to vacate several aged office buildings that no longer meet government standards and are in need of extensive renovations.

Public Works has actively been procuring new space, namely purchasing the former Nortel Campus and constructing three new office buildings in Gatineau.  The recent solicitation won by the Train Yards started two years ago, when Public Works published a massive request for information on the availability of 3.875 million square across the National Capital Region, including a specific inquiry about east-end space.

Nine proposals were submitted, six of which met the requirements set out in the RFI.

Only four of those six proponents responded to the government’s subsequent request for qualifications. Three firms were qualified to submit a bit, all of whom responded by the July 9, 2010 deadline.  The federal government refused to comment on this project this fall, even though rumours that The Ottawa Train Yards had won the contract began circulating over the summer.  In response to an inquiry from OBJ, Public Works confirmed in November that a contract was in place, but refused to identify the location or vendor until this week.

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