Ottawa's downtown office market is shrinking, and turning old office buildings into homes is a big reason why. Conversions have shrunk the inventory of lower-tier office buildings in the city's core by nearly 10 per cent since 2020, according to a report from Avison Young.
What has already been converted
Six downtown Ottawa office properties totalling nearly 750,000 square feet have been turned into residential complexes. Together, those six buildings have created about 1,400 housing units.
That means a meaningful share of the older, less competitive office space in the core now houses residents instead of tenants, which is the shift the Avison Young report is tracking.
Four more buildings on the table
The report also looks at what could come next. Four more buildings have been proposed for conversion. If they go ahead, another 500 housing units could be added, and an additional 370,000 square feet of aging, less competitive office space would come off the market.
Adding those four to the six already converted, the total inventory of B- and C-class office space would fall by more than 1.1 million square feet, or 13.5 per cent.
What it means for vacancy
The conversions matter for more than housing numbers. Avison Young says that if no downtown buildings had been converted, downtown Ottawa's class-B and -C vacancy rate would be 21.4 per cent by 2028. With conversions, the firm predicts the vacancy rate for class-B and -C properties in the core will drop to 15.7 per cent instead, a gap of 5.7 percentage points.
In plain terms, taking weaker buildings out of the office market leaves fewer empty floors competing for tenants, and the report says that pulls the vacancy rate down.
How Ottawa compares
Ottawa is not the only city going through this. For comparison, Calgary has seen 11 per cent of its class-B and -C office inventory removed from the market in recent years.
Some developers are hitting pause
The pipeline is not guaranteed to keep moving. CBRE's Victoria Scott reported that developers including Devcore and Regional Group are pressing pause on potential conversions. The material available to ottown does not say why they are pausing, or whether any of the four proposed buildings in the Avison Young report are among the projects affected.
What is still unknown
The report's figures describe what has been converted and what has been proposed, but the facts available do not name the four proposed buildings or give timelines for when any of them might start. Whether the 500 additional units materialize will depend on those four conversions going ahead, which, given the pause Scott described, is not a given.
For Ottawa residents, the takeaway is that downtown is slowly changing character: about 1,400 homes are already in buildings that used to be offices, and the numbers suggest more could follow if developers keep going.
Sources: Ottawa Business Journal
