Downtown commercial height restrictions: Time to go
http://www.ottawabusinessjournal.com...5584642636.php
Wed, Aug 26, 2009 3:00 PM EST
It is a generally accepted principle at city hall that combating urban sprawl across Ottawa requires a new look at density levels in residential developments.
This new philosophy culminated a few years back in city council's decision to support urban intensification as a way to make better use of available development space in and around our urban core; namely, more allowed units and more height, to allow for better use of available residential land. More height allows a developer to create something other than a short, squat rectangle and instead deliver a thinner tower, which lets more sun shine through and increased landscaping.
Nowhere is this more necessary than in the downtown commercial district where, once again, we face one of the lowest vacancy rates in the country as well as some of the highest rental rates. I would guess most residents probably don't understand why this is, or how it came to be.
Ottawa's downtown core is the preferred location for many different types of organizations. The federal government – by far and away the largest occupant of office space in the core – will likely always have a large contingent of employees that need to be near Parliament Hill in order to attend meetings, briefings and simply make government work. Other groups, such as national lobby groups, embassies and federally funded agencies, for whom proximity to the seat of power is not simply a "nice to have," would also say that a downtown location is essential.
Yet there is almost no space available to lease anymore. Tenants have little choice and less leverage than ever when it comes to negotiating leases unless they start their search very early. They can also expect to pay close to twice the rent downtown than in other parts of the city. Does this make sense?
Should the need to locate in Ottawa's downtown core cost your firm twice what it costs in Nepean or Kanata? Should it cost more than Toronto or Montreal? Certainly I agree there should be a premium paid for a better-quality building in a better location; that is basic real estate common sense. But a 100-per-cent premium over the suburbs? And don't get me started on the parking costs...
The solution is to allow for greater density on future development, which translates simply to more height. But in Ottawa, this is easier said than done. The National Capital Commission currently protects several dozen sight lines designed to preserve the views and skylines around national heritage buildings in and around Parliament Hill. These are some of the most photographed views of Ottawa and are represented in almost every postcard rack you might come across.
A significant aspect of the development restrictions are to ensure that the skyline behind and around Parliament Hill remain uncluttered and in virtually the same state as the 19th century. In other words, to ensure that from almost any point you stand to look at Parliament Hill, there is nothing behind it.
My question is this: Is this a realistic viewpoint for helping keep Ottawa moving forward and growing as it should?
Would Toronto be the same without the CN Tower? Would New York or Chicago or Shanghai be the modern symbols of commerce and trade without their signature skyscrapers? Is it right to insist Parliament Hill remain as the most prominent feature in the core ... forever? Would it be so terrible to have some architecturally pleasing, 45- or 50-storey towers providing a modern contrast to the Gothic style of the Peace Tower?
Is having a pretty postcard from every angle worth putting up with inflated rents and ugly buildings in the core?
If the answer to that question is yes, then the citizens of Ottawa had better prepare for some major development projects outside of the core as the need to expand continues.
According to recent trends, should the federal public service and its entourage of supporting Crown agencies continue to grow at present rates, then within the next decade we could easily run out of sites for new construction within the core.
Without a plan to accommodate new growth, we could find our city stifled in a very real and expensive way. You can't knock down old buildings to make way for new development without first moving existing tenants out of existing space. Thus, there needs to be available development sites in the core to ensure those people have someplace to move.
As always, the real victims are taxpayers and business owners forced to bear the consequences of significantly higher office rents as a result of a restriction on new supply. Downtown rents continue to rise and the assessed property taxes rise with them.
If you think about it, we have one arm of the government, the NCC, creating an artificial cap on supply, another arm of the government, the federal public service, creating huge demand which is driving up rents, and finally the City of Ottawa assigning higher property taxes based in part on the rents the feds are paying.
Since the federal government occupies more than 50 per cent of the core, the majority of the rental premium is borne by you and me.
Maybe it's time for a new way of thinking.
Darren Fleming is senior principal and broker of record for Cresa Partners.
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