Canada’s federal government has purchased an office property in downtown Ottawa after vowing to sell off or repurpose up to half of the office properties it owns in the national capital area.
The Canadian federal government paid about $51 million for a two-building portfolio containing the Chambers, a 14-floor office tower at 40 Elgin St., and a four-floor office building from the late 1800s at 46 Elgin St. The Chambers, completed in 1994, contains just over 200,000 square feet of office space.
Toronto-based Allied REIT was the seller. Following the deal, it no longer owns properties in the Ottawa area.
Last May, the federal government stated it aimed to sell or repurpose up to half of its office properties in Ottawa and Gatineau, Quebec, over the next decade in the capital area as part of what it called "responsible government spending."
The new acquisition does not jibe with that plan, said one watchdog group.
“Taxpayers have every right to scratch their heads at this news," said Franco Terrazzano, federal director of the Canadian Taxpayers Federation, in an email to CoStar News. "The government said it was getting rid of offices but buying new offices sure sounds like a silly way to get rid of offices.
“Taxpayers need and deserve a clear explanation from the government outlining why bureaucrats need new office buildings when they're supposed to be selling off buildings."
The purchase of 40 and 46 Elgin will result in a $67 million savings for the federal government, a government media representative told CoStar News in an email. Now that it owns the properties, the government will not have to pay to rent space at 40 Elgin.
“Since 1998, PSPC (Public Services and Procurement Canada) has leased space in the Chambers building, located at 40 Elgin Street, to serve as long-term administrative office space for the Senate of Canada," media relations representative Jeremy Link said in an email. "The building is currently being fit-up to provide swing space for the Block 2 redevelopment project and will be used to accommodate members of the Senate."
The Canadian Senate is a body made of 105 senators appointed by the governor general on advice from the prime minister. Senate approval is required for bills to become law, although the body rarely invokes its power of rejection.
The office complex is located a short distance from the National War Memorial, Confederation Square, the Office of the Prime Minister and Parliament Hill.
The availability rate for office properties in downtown Ottawa rose from 14.9% to 15.7% in the fourth quarter, according to an Avison Young report that noted that the downtown area has 23,000 square feet of vacant Class A office space, more than all of the nearby suburbs combined. The average rate for a downtown Ottawa office property is just over $24 per square foot per year, while suburban equivalents are in the range of $13 to $14 per square foot in the Ottawa region.
Allied REIT did not immediately reply to telephone and email messages from CoStar News asking for comment.