District Realty to convert Elgin Street office building to residential units
David Sali, OBJ
April 3, 2024 1:57 PM ET
A company that pioneered the concept of turning downtown Ottawa office space into residential units is adding another property to the growing list of conversions in the city’s core.
District Realty plans to redevelop an 11-storey office building at 200 Elgin St. into a multi-residential complex, real estate firms CBRE and Colliers said in their first-quarter Ottawa office market reports released this week.
The project will remove roughly 140,000 square feet of space from the city’s office inventory, Colliers executive Warren Wilkinson told OBJ on Tuesday.
District Realty did not immediately respond to a request for comment.
Known as the Elgar Building, the class-C structure across from city hall’s heritage building was completed in 1966. Its tenants include RBC as well as law firms and other professional services companies.
It’s the latest in a string of office-to-residential conversions planned for Ottawa’s downtown core, where the office vacancy rate has spiked since the pandemic.
As more tenants shed class-B and C office space, turning empty suites into rental apartments is an increasingly attractive proposition for landlords and developers looking for better uses for such buildings as they outlive their original purpose.
Firms such as CLV Group and Katasa Group, for example, have recently acquired large downtown office buildings with the intent of repurposing them as rental apartment complexes.
In a bid to spur more conversions, Ottawa city council approved a proposal last fall to reduce certain development fees on such projects for the next two years.
Proponents of conversions say that while not all aging office buildings are well-suited to being reborn as residential spaces, it’s an option worth looking at as the city grapples with a rising inventory of empty commercial real estate and a growing housing crisis.
“It’s not going to be the only solution, but it’s nice to see more developers taking risks on those buildings and converting them and therefore helping us with the lack of inventory on the multi-res side,” Louis Karam, managing director of CBRE’s Ottawa office, said this week.
It’s not the first time District Realty has redeveloped a downtown office building into residential units.
In 2015, the company decided to convert the top five floors of its building at 169 Lisgar St. – a separate structure connected to 200 Elgin St. – from offices to bachelor, one- and two-bedroom apartments.
District Realty repurposed about 30,000 square feet of former office space at the Lisgar Street property into 42 rental suites in response to a spike in vacancies at the class-B building, which opened in 1972. The rest of the building, comprising about 110,000 square feet, remained devoted to office space.
The firm’s executive vice-president, Jason Shinder, told the Ottawa Citizen in a 2015 interview he believed it was the first time an Ottawa office building had been converted into rental apartments.
District Realty followed that project with another conversion three years later, purchasing an eight-storey office building at 170 Metcalfe St. from the Canadian Red Cross and turning it into a 61-unit rental complex.
Shinder, now the company’s CEO, told OBJ last year the Metcalfe Street project was a “home run” and said his firm was looking to acquire other outdated office buildings in the core for the same purpose.
Office-to-residential conversions remain a “very viable” option for the company, he added, even as soaring inflation, interest rate hikes and higher cash-in-lieu of parkland fees have made such projects more expensive.
“I don’t see an occupancy risk,” Shinder said. “Ottawa’s never had a double-digit vacancy (rate) in (residential rental) product, and I don’t see that changing. If you’re building a practical, good product that meets the desires of the tenants, I think it will be full.”
https://obj.ca/district-realty-to-co...fice-building/
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