Developer considers converting downtown Ottawa office tower to residential space

From office tower to housing CTV's Tyler Fleming reports the plan to covert downtown office space to housing may begin a trend.

Ottawa’s downtown core remains relatively quiet, with many workers continuing to stay home.

Now, some developers are snapping up old office towers with the intention of converting buildings into residential units, in what could be the start of a new revitalization for the city's business sector.

At Metcalfe Hair design at O’Connor and Slater streets, the days of busy lunch-hour trims aren’t what they used to be.

“Business has definitely dropped,” says Karen McAlear, who runs Karen’s Barber Chair inside the salon. “Government workers are working from home. … Now we are relying more on the residential.”

As hybrid and work-from-home models prevail, businesses which used to rent space in towers are vacating and replacing the space with ‘for lease’ signs.

However it’s not quite the case for the 15-storey tower where McAlear is based. The large brown tower is an old National Defence office, which closed when DND moved headquarters to Kanata.

The federal property was sold to Montreal company Groupe Mach, for around $40 million. The real estate development firm says that they are considering converting the space to residential units.

It’s location steps from the Parliament buildings, light rail service and a recovering ByWard Market, along with in ground parking and a suitable size, make it an ideal candidate for residential space.

“We really need that kind of change. A building like that being converted into residential would benefit the economy,” says Michelle Groulx, executive director with Ottawa Coalition of Business Improvement Areas.

“It would certainly give a boost where you have people there all the time not just five days a week during the day time. …If people are working from home, which would now be downtown, then you would have them there all the time.”

Federal public servants are the city’s largest group of workers. While discussions have started about a potential return to office life, there are no details on what it may look like, how it will work and the number of people that would actually return.

Office vacancy rates have increased dramatically during COVID. Some companies, like Shopify, have made the choice not to return. The swell of empty urban space cannot remain vacant.

“There has always been older buildings with smaller floor plates that would lend themselves well to residential conversion,” says Shawn Hamilton, a veteran commercial real estate executives, now Vice President of business development with Candrel Group. “Outside of vacant buildings as they exist now, there has been fundamental demand in the downtown core and across Ottawa for downtown growth.

McAlear remains hopeful the project will continue to move forward with residential and that others follow suit to help revitalized downtown.

“I think more of that has to happen,” she said. “It will just bring a new energy.”