BOMA Ottawa Commercial Space Directory 2015/2016 23

Class C.

BOMA defines it as “buildings competing

for tenants requiring functional space at rents

below the average for the area.”

Why? It could be the amenities, the quality and

freshness of the décor and other factors related to

outdated design approaches, such as low ceiling

heights and lack of natural lighting.

Whatever the case, property owners of Class C

buildings have two choices, stick with the status quo

and pursue tenants in need of more economical

leasing options, or remake the property to offer the

market a more desirable product that can generate

greater revenue.

But how? Depending on the circumstances,

the ideal course of action could be a renovation, a

retrofit to repurpose the building for another use, or

if need be, a complete demolition to make way for

new construction.

We spoke with two members of BOMA Ottawa,

each of whom took a different approach to remake

an existing Class C property, and what factors

contributed to their choice of approach.

169 LISGAR169 Lisgar in an 11-storey commercial property

built in 1972. In 1984, it was expanded with an

By Leo Valiquette Photography by Mark Holleron

additional 5,000

square feet per floor.

The building was

split between 140,000

square feet of office

space, an 80,000 square-

foot parking garage and

10,000 square feet of retail.

The federal government has

traditionally occupied as much as a

third of the office space.

Last year, property manager District Realty

decided to take 30,000 square feet of office space

on the top five floors and convert it to 42 upscale

apartments.

Why? In response to a softer market for office

space and a dramatic increase in the demand for

quality residential space downtown, said Jason

Shinder, Executive Vice-President and Principal of

District.

“It’s getting more and more difficult to rent

office space,” he said. “We had the government give

up some space. We had a language school that went

out of business. It’s been difficult to rent the back

of building where government has been the typical

tenant … this particular space in the building lends

itself better to residential than to office.”

District

decided

to take

a hybrid

approach

and repurpose

part of the

building. About

110,000 square feet

will remain office space

because it’s still seen as a

solid and stable asset.

The conversion of that 30,000 square feet

required new windows, the addition of a second

stairwell, the replacement of one elevator and the

addition of a new one, and a new HVAC system.

That’s of course in addition to all the construction

and fit up of individual rental units with full baths

and kitchens.

“It will be an above average apartment

for Ottawa,” Shinder said. “Each unit has five

appliances, central air, and there’s a quality fitness

facility on site.”

With a little creativity and reinvestment, Shinder

believes there are many downtown commercial

properties that could be converted to mixed use

in response to the market’s desire for more living

Renovate or wrecking ball?Deciding when and how Class C properties can get a new lease on life

“Revenue from a residential use isn’t

much different than from a commercial use.”

— JASON SHINDER

24 BOMA Ottawa Commercial Space Directory 2015/2016

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options downtown, to create more stable cash flow

for the long term.

“I don’t think it’s necessitated because of a

poor commercial market,” he said. “We made this

decision because we had an abundant level of

confidence in the residential market and the two were

interchangeable. Revenue from a residential use isn’t

much different than from a commercial use.”

219 LAURIER AND 400 CUMBERLAND The federal government again factors into the fate

of these two buildings. 219 Laurier was built in

1966, while 400 Cumberland followed in 1972.

Federal government departments lease both.

In this case, owner Dream Ltd. realized it had to

give both buildings an overhaul to remain current

with the changing needs of the client if it wanted to

retain or attract government tenants in the future.

Under the Government of Canada’s Workplace

2.0 Fit-Up Standards, the focus is on achieving

a minimum rating of Silver under Leadership in

Energy & Environmental Design (LEED) standards.

About two years ago, Dream sat down with

the federal government to understand what

investments it would have to make to be compliant

with Workplace 2.0. It’s the kind of proactive

approach the company realizes it must take to

remain attractive to any tenant in the public or

private sector.

HVAC systems and interior designs will be

upgraded to accommodate more density per floor,

while new low-flow plumbing will reduce water

consumption. New high-efficiency lighting has

already been installed.

“You become more competitive because you

lower your occupancy costs and can pass these

savings on to tenants, which makes you more

attractive,” said Gordon Wadley, Director of Leasing

for Dream’s Dundee REIT. “It’s a capital investment

for us, but we take environmental stewardship

seriously.”

At a time when all classes of property in Ottawa

are seeing substantial vacancies and Class A

properties are offering some aggressive discounting

to attract and retain tenants, retrofits that meet at

least some LEED standards can be a big competitive

differentiator for Class B and C owners, Wadley

added. These buildings may not be the flashiest on

the block, but that’s not an issue if they have “good

bones,” are efficient and well run.

“I think the ‘B’ and ‘C’ class markets can attract

and retain viable tenancies with an efficient retrofit

program if the interiors, base building systems,

management and performance is viewed as good

value proportionate to the rent,” he said. “It’s like

any service provider in that you want to exceed the

expectations of your client.”

THE SIR JOHN CARLING BUILDING – R.I.P.But at some point, a building just reaches that point

in its lifecycle where the best option is to call in the

demolition crew.

That proved to be the case for the 11-storey

Sir John Carling Building at 930 Carling Ave. Built

in the ’60s to consolidate the offices of the federal

department of agriculture, the building gave several

decades of service.

But by the mid-90s, a report had concluded

that, due to neglect, “the building may not be worth

saving.” In 2003, renovation costs on a building that

had cost $10 million to build were estimated at $57

million.

By 2010, the building had been deemed to be at

its end of life and vacated. Despite a federal heritage

designation for some of its design elements, all but

the attached single-storey cafeteria was demolished

by means of a controlled implosion on July 13,

2014.

The cost of the demolition was $4.8 million. In

this case, the federal government had decided that,

during a time of economic uncertainty and budget

cuts, demolition was the more prudent course

versus renovation.

If there is a moral to this story, it lies in the

fact that for any property to have a long an useful

life, it must be well-maintained, with periodic

reinvestments that will avoid the need for large-

scale renovations that may be cost prohibitive.

As Wadley put it, it all comes down to having

“good bones” and keeping them in good health.

“I think the ‘B’ and ‘C’ class markets can attract and retain viable tenancies with an efficient retrofit program.” — GORDON WADLEY