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DEVELOPERS BREAK GROUND ON TWO TOWERS
Ottawa Business Journal - Sunday, March 23, 2003 - As the earth warms and softens, two property developers will break
ground for a pair of large-scale projects within the next few weeks.
On Preston Street, Sakto Corp. will begin the residential component of
its Preston Square next month. In the downtown core, GWL Realty Advisors
Inc. will break ground for its tower at 269 Laurier Ave. The building is
being constructed for the federal government, which will occupy it in
September 2005.
Sakto's new 180,000-square-foot apartment building will be anchored by
its adjacent 10-year-old Xerox tower, which overlooks the Queensway. The
residential tower will have 158 units sized between 750 to 1,100 square
feet. Eventually, Preston Square will include five buildings totalling
350,000 square feet. The additional real estate will be worth between
$25 million to $30 million.
Brian Murray, director of leasing and marketing for Sakto, says he is
unsure when the next commercial component of Preston Square will go
ahead. Nevertheless, he has embarked on an aggressive pitch to lure a
large user away from the downtown core.
"We'll offer significant discounts. We're not trying to hit home runs
with regards to our returns," he says. Sakto will offer lower rental
rates than those in the core by achieving savings through operating and
construction costs."Over a 10-year period, it could be millions of
dollars in savings (for tenants)," says Murray.
DOWNTOWN SITE
In the downtown core, GWL is working in partnership with RON Engineering
and Arnon Corp. to build a 350,000-square-foot tower at 269 Laurier Ave.
RON is now excavating the site for an underground parking lot.
"We're ripping up some asphalt and doing some preliminary work right
now," says GWL's Rob Kavanagh. There will be an official groundbreaking
ceremony at the end of April, when an artist's rendition of the
structure will be unveiled, he adds.
GWL won an intense competition organized by Public Works and Government
Services Canada to receive a 15-year lease from the federal government
for the new building.
The losers of that competition continue to search for a large tenant
that would allow them to proceed with their new office towers. There are
several vacant downtown lots that can accommodate towers, but developers
want to secure tenants that require 100,000 square feet.
Fred Speer, O &Y Properties' vice-president of leasing for the national
capital region, has been looking for this elusive tenant for two years.
O &Y has plans for a 200,000-square-foot tower, which would be an
expansion of its Place de Ville complex at the corner of Queen and Kent
Streets.
"We're carrying on doing what we're doing, but large companies are quite
reluctant to make any big decisions," says Speer, referring to economic
uncertainty. Once the war in Iraq is concluded, he thinks
decision-makers will pull out their chequebooks again.
If this happens, Speer says Sakto's Preston Street development will not
be considered competition. "Sakto's market is different. They're
probably seeking someone in the suburban area. There is also a
significant government presence in that area. Typically, if someone is
looking for space, they have specific boundaries in their mind."
Ottawa's downtown vacancy rate for Class A space is the lowest in the
country at around three per cent, which would normally be a developer's
dream.
However, they are reluctant to build any new product without a
pre-leasing commitment of at least 50 per cent.That anchor tenant could
be the federal government. PWGSC continues to search for more office
space downtown. When PWGSC makes its decision, one of three developers
will score the lucrative contract, says Royal LePage Commercial Inc.
vice-president Paul Hindo. Minto Developments, Oxford Properties and O
&Y would all fit the bill.
"I think the government will put out a tender for one more building in
the downtown core. It's a close call between those three developers,"
says Hindo.
For its part, PWGSC does not have immediate plans for any large tenders,
says spokesperson Lucie Cote, but the government body recently issued a
request for information for available space measuring 24,000 square
feet.
For more information on Sakto, or this press release, please email info@sakto.com.
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