Newsletter: February 2012

Ottawa's commercial real estate market in 2011 has continued to show positive signs of growth surpassing the $1 billion mark in transactions for the second year in a row. Further, both the volume and overall value of real estate transacted increased for the second year in a row.

The chart below details the sales for each of the asset classes for the past two years. The total number of sales for 2011 was up by 15% to 314 sales (over $500,000) compared to 273 sales in 2010. The overall value transacted rose 7% from the previous year. Increases in the Industrial, Special and Vacant Land market segments are the major reasons for the overall growth in transacted value. This was offset by decreases in the multi-family, retail and office sectors. In terms of volume traded, only the Retail and Office market segments failed to show any growth from the previous year, but even then, remained relatively stable.

2010 2011
Property Type # of Sales Value # of Sales Value
Industrial 29 $72,728,483 39 $148,700,000
Multi-Family 54 $171,840,500 55 $133,480,500
Retail 42 $119,370,000 41 $88,344,400
Office 52 $485,042,415 50 296,405,379
Land 88 $186,842,863 117 $331,416,976
Special 8 $15,420,578 12 $126,742,672
Total 273 $1,051,244,839 314 $1,125,089,927

The largest transactions that occurred in each of the asset classes in the past year were as follows.

Land
Property Type Address Vendor Purchaser Consideration
Retail 1670 Heron Road Kanco Heron Gate Mall Ltd. Riotrin Properties (Heron Gate) Inc. $17,000,000
Industrial 2001 Bantree Street Newvest Realty Corporation & Penreal Property Fund V Holdings Inc. Chariot Capital 2011 LP & Voiture Capital Inc. $25,500,000
Office 1600 James Naismith Drive & 1595 Telesat Court 3787117 Canada Inc. The Toronto Dominion Bank $80,000,000
Residential 1170 Fisher Avenue Fisher Avenue Estates Ltd. 1170 Fisher Apartments Inc. $27,000,000
5271 Richmond Road Private Individual South Kanata Development Corporation $33,800,000

Now onto the sales for the final month of 2011. There were a total of 24 sales reported in the month of December with a total value of $161,926,737. Retail building sales accounted for 5.3% of the total, industrial buildings 24.7%, office buildings 54.5%, apartment buildings 1.5%, special buildings 0% and vacant land 13.9%.

Sales data has been provided by RealTrack, Inc. For more information visit http://www.realtrack.com or call 1-877-962-9033

SALES

There were two transactions in the RETAIL market with a total value of $8,609,500. The majority of that sum can be attributed to the sale of 1452 Youville Drive. The property sold to Zena Investment Corporation from Marcel S. Belanger Investments Inc. for $7,979,500 or $172/sf of building area. It is improved with a single-storey car dealership which last transferred in May 2007 for $4,025,000.

There were five INDUSTRIAL building sales during the month of December with a total value of $40,075,000. 2001 Bantree Street represents the largest industrial building transaction. The property sold to Chariot Capital 2011 LP and Voiture Capital 2011 Inc. from Newest Realty Corporation and Penreal Property Fund V Holdings Inc. for $25,500,000 or $99/sf. It is improved with a single-storey distribution warehouse that was constructed circa 2001. The warehouse features 24 loading doors and a clear ceiling height of 26 feet. Nathan Smith of Cushman & Wakefield Ottawa was the listing broker with regards to this sale.

302 Legget Drive was the second largest industrial building sale for the month of December. The property sold to 1384449 Ontario Inc. from Legget Drive Property Limited for $7,175,000 or $84/sf. It is improved with a single-storey industrial/office building that features 10 loading doors and a clear ceiling height of 17 feet. The property was 90% occupied to five tenants at the time of sale. Graeme Webster, Marc Morin and Steve Ramphos of District Realty Corp were the agents involved with this transaction.

The next largest sale is 5499 Canotek Road which was purchased by Morguard Industrial Properties (1) Inc. from Tippet-Richardson Limited for $4,050,000 or $109/sf. It is improved with a single-storey industrial building with a two-storey office component that was built in the mid 1980's. The building features four loading doors and a clear ceiling height of 28 feet. The property was subsequently leased back to the vendor. The property previously sold in March 2007 for $3,025,000. Nathan Smith of Cushman Wakefield Ottawa was also the broker with respect to this transaction.

Finally, 2773 Lancaster Road represents the last major industrial building transaction. The property sold to John & John Holdings Inc. from Nashville Holdings Ltd. for $2,350,000 or $126/sf. It is improved with a single-storey warehouse with a two storey office component. The warehouse features five loading doors and a 24 foot clear ceiling height. The property was vacant at the time of sale and is to be occupied by the owner. It previously sold in May 2005 for $1,213,390.

There were six OFFICE sales with a total value of $88,295,000. The majority of that sum can be attributed to the sale of 1600 James Naismith Drive and 1595 Telesat Court. The properties were purchased by The Toronto-Dominion Bank from MBNA Canada Bank for $80,000,000 or $258/sf. The properties are improved with two, eight-storey Class “A” office buildings. The transaction was the result of the Bank of America selling their Canadian credit card portfolio to TD Bank Group.

Another large sale in the Office market segment is the purchase of 2211 Riverside Drive. The property sold to Capital City Shopping Centre Limited from 2075227 Ontario Inc. for $3,650,000 or $171/sf. It is improved with four-storey office building that was leased to 13 tenants at the time of sale. The property previously sold in July 2005 for $2,185,000. Rick Locatelli and Susan Anderson of Remax Metro-City were the brokers with respect to this sale.

There were three transactions in the APARTMENT market during the month of December with a total value of $2,366,000. The largest transaction was 258 Stewart Street which sold to Private Individuals from 7174560 Canada Inc. for $921,000 or $307,000/unit. It is improved with a two and a half-storey brick triplex. The property previously sold in June 2009 for $740,000.

There were no transactions in the SPECIAL building market.

There were eight vacant LAND transactions during the final month of the year for a total consideration of $22,581,237. Of the eight transactions, there were seven residential land sales and one future growth land sale. The largest transaction was for nearly 17 acres of unserviced residential land located at 302 Longfields Drive. The property was purchased by Richcraft Homes Ltd. from Ottawa Community Lands Development Corp. for $7,200,000 or $431,344/acre. The site is to be developed with 41 single family homes and 194 townhouses.

The next largest transaction was 655 Longfields Drive. The property sold to Jock River Farms Limited from Ottawa Community Lands Development Corporation for $4,043,862 or $271,382/acre.

514-532 Rochester Street represents the last significant land transaction. The property was acquired by Rochester Property Holdings Ltd. and Rochester Holdings LP from Private Individuals for a registered price of $2,000,000 or $123/sf. Quintin Colaiacovo and Nico Zentil of CB Richard Ellis were the agents involved with this transaction.

NEWS

The local unemployment rate as reported by Statistics Canada for the month of December held at 6.1% for the second month in a row. The provincial rate for December however, fell to 7.7% from 7.9% in November. The national overall unemployment rate rose slightly to 7.5% from 7.4% a month prior.

According to CMHC's news release, the number of residential units under construction during the month of December decreased 4.9% year over year to 4,918 units. Housing Starts for the month have increased however, rising 3.9% from 542 units in 2010 to 563 units in 2011. Year-to-date housing starts have decreased 10.1%, from 6,446 units in 2010 to 5,794 units in 2011.