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Originally Posted by kevinbottawa
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Katasa Group buys Slater Street highrises, eyes office-to-residential conversion
David Sali, OBJ
August 31, 2023 4:59 PM ET
A local developer is adding to Ottawa’s list of proposed office-to-residential conversion projects with a plan to turn a Slater Street commercial building into an apartment complex with more than 200 rental suites.
KTS Properties, the Ontario arm of Gatineau’s Katasa Group, has partnered with Sudbury-based ARG Devco to acquire a pair of office highrises at 66 and 130 Slater St. from Toronto’s KingSett Capital. Terms of the sale, which closed late Thursday afternoon, were not disclosed.
In an interview with OBJ this week, Katasa Group partner Tanya Chowieri said 130 Slater St. – a 13-storey, 123,000-square-foot building that was constructed in 1966 and is now only one-third occupied – is an “ideal” candidate to be redeveloped as a multi-residential property.
“There’s no wasted space,” said Chowieri, noting the L-shaped building is in good condition and has a fairly narrow, rectangular core that lends itself well to apartments.
“I thought the building had great bones already. KingSett has done a great job of (maintaining) the buildings.”
Chowieri said the company’s initial concept calls for about 203 rental suites in a mix of studio, one-, two- and three-bedroom apartments at starting rents of $1,600.
She said the developer is still ironing out details of the proposal, including what amenities will be offered.
“We’re thinking of different ideas of what to put in there,” she said, noting the company is also looking at incorporating ground-floor retail space into the proposal. “It’s very preliminary at the moment.”
While KTS initially targeted only 130 Slater St. due to the site’s potential for a conversion play, KingSett was also shopping 66 Slater, a 22-storey, 262,000-square-foot office highrise just down the block.
Chowieri said her firm decided to bid on both properties, with the aim of finding new homes for most of 130 Slater’s remaining commercial tenants in the neighbouring highrise, which has about 38,000 square feet of vacant space.
Completed in 1970, 66 Slater has undergone substantial renovations over the years, with KingSett investing about $29 million in the property since 2010.
Its tenants include several government agencies and departments, such as the Privy Council and Veterans Affairs Canada, as well as co-working giant Spaces, which occupies about 72,000 square feet.
Graeme Webster, a partner at Koble Commercial Real Estate and Brokerage who represented the buyers, said 66 Slater boasts a strong lineup of long-term government tenants and is further bolstered by the presence of Spaces, making it an attractive long-term investment for a firm like Katasa.
“When you walk through the space … they’ve invested a lot of money,” he said of Spaces, a multinational provider of flexible office real estate. “It’s cutting-edge co-working space.”
In Katasa, 130 Slater has an owner that’s no stranger to the daunting task of transforming a 57-year-old office tower into a modern residential complex.
The company has overseen a number of conversion projects in Montreal and Ottawa, including the Theo building, a 12-storey office-turned-student residence at the corner of Rideau Street and King Edward Avenue.
Chowieri said the company has been scoping out other opportunities to get back in the conversion game, but finding the right property is often easier said than done.
“We have quite a bit of experience in conversions, so we were not afraid of that,” she said, adding the firm conducted “extensive studies” of 130 Slater to determine whether it was a viable candidate before pulling the trigger on the deal.
“There are currently a lot of office buildings that are empty downtown and have possibilities of being converted that are for sale. However, the footprints don’t necessarily work.”
Thursday’s sale is another sign that more developers are embracing the concept of conversions as the escalating housing crisis dominates headlines and Ottawa’s downtown office vacancy rate rises to record highs amid the shift to hybrid work during the pandemic.
In announcing the capital’s latest conversion project, KTS is following in the footsteps of Ottawa-based CLV Group, which recently completed a major redevelopment of a former government office building at 473 Albert St. into a 158-unit apartment complex.
Last month, CLV announced it is poised to launch its second conversion project at the recently vacated Narono Building at 360 Laurier Ave.
With the federal government planning to divest aging office properties in the National Capital Region and other 1960s-era buildings nearing the end of their life cycles, Webster said it’s no surprise that office-to-residential conversions have become the topic du jour in local development circles.
“At the end of the day, there’s residential demand, there’s pressure from virtually all levels of government to really look at (converting) existing (office) real estate and make a run for residential.”
https://obj.ca/katasa-group-buys-sla...eet-highrises/
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