Impatience grows as spare federal buildings stuck in bureaucracy

The sluggish process for selling spare federal buildings is trying the patience of politicians and developers hoping to transform them into desperately needed housing in Ottawa.

In May, Public Services and Procurement Canada (PSPC) released a list of 10 properties in Ottawa-Gatineau it's looking to unload. Eight months later, none of them have hit the market.

"I don't think it's fast enough," said Yasir Naqvi, the Liberal MP for Ottawa Centre. "I think it needs to be faster. We do have a real housing crisis in our city and we have a real need to revitalize our downtown core."

PSPC said all 10 properties remain in the "due diligence" phase of the disposal process. That means completing studies and reports on environmental, heritage and legal requirements, as well as building appraisals.

Developers see major potential in the buildings: some candidates for office-to-housing conversions, while demolishing others could clear out prime parcels for mixed-use development.

"I don't know what the hold up is, but there's certainly an opportunity there and there'd be some willing participants, I'm sure," said real estate broker Michael Church, managing director of Avison Young Ottawa.

"We're all kind of waiting," he added. "Hopefully it happens sooner rather than later, because there's some problems that we can help solve."

The Jackson Building, right, at the intersection of Bank and Slater streets in downtown Ottawa last week. (Patrick Louiseize/CBC)

Neil Malhotra of Claridge Homes foresees a lot of developer interest, depending on the timing and conditions when the properties are finally made available.

"The sooner the better, obviously, for downtown Ottawa," he said.

"It's a long process when you're in a housing crisis."

PSPC 'working diligently' to speed up

Graeme Hussey, director of housing development for Centretown Citizens Ottawa Corporation and president of Cahdco, said the non-profit sector wants a piece of those properties too.

In his view, though, the disposal process is too opaque.

"If there is a group, a non-profit or a market developer, who's interested in either buying or converting that into housing, who do you talk to?" he asked.

"What is the process, the timelines, the predictability? Because right now, when I've inquired, it's not clear."

Naqvi said it will become clearer in the latter stages of the disposal process.

Ottawa Centre Liberal MP Yasir Naqvi rises during Question Period in Ottawa Oct. 21, 2022. (Adrian Wyld/The Canadian Press)

In an emailed statement, PSPC said it's "working diligently to identify opportunities to accelerate the disposal process" but cautioned, as it said in May, that it could take "several years before the due diligence activities and required consultations are completed and a disposal completed."

That's not fast enough for Somerset Coun. Ariel Troster, whose downtown ward includes the Jackson Building and L'Esplanade Laurier, two sites on the disposal list.

She said developing them could be "enormously transformative" for her ward. Some could be ripe for conversion to rental apartments, while others could become homes for theatres or non-profits, re-energizing a downtown hit hard by federal employees working from home.

"I would like to see the disposal of those buildings expedited as much as possible," Troster said.

"It can take several years to do a conversion," she added. "So if we want to see something built within the next five to 10 years, I mean, it really has to happen yesterday."

L'Esplanade Laurier called 'immediate priority'

Naqvi, Troster, Malhotra and Hussey all sit on a task force that released a downtown revitalization action plan last week. The report urges "less focus on process and more on results."

It calls for a framework "to accelerate the conversion, development, and rehabilitation of buildings for housing and mixed uses" and zeroes in on L'Esplanade Laurier as an "immediate priority."

A concept for the redevelopment of the L'Esplanade Laurier site presented as part of the Downtown Revitalization Task Force's action plan. (EVOQ Architecture)

Church said that full downtown city block has "absolutely incredible potential," but there are challenges. The boxy layout of the towers means they probably couldn't become housing in their current form.

"The towers are large and square, which doesn't speak well to access to light, so it's not a great conversion candidate," he acknowledged. "The really interesting thing would be what would it cost to drop that and restart all over again."

Another property on the disposal list, the Sir Charles Tupper Building near Mooney's Bay, is likewise on a prime location — and has a much more promising layout.

"The way that's set up, it speaks to conversion for purpose-built apartment or affordable housing, because it's long and skinny," said Church.

"The infrastructure is all in place. It's attached to bikeways and beltways. It's got access to transit. It's easy to get to."

Process includes 'important steps' for public interest, says MP

PSPC must follow rules before unloading any of those buildings. They require due diligence on Indigenous rights, security conditions, physical performance, heritage value and environmental conditions.

It then has to consult with other federal departments to see if they want the properties, as well as provinces, municipalities and Indigenous groups. The policy also requires notification to official language minority communities.

PSPC must then develop a business case and dispose of the property fairly, in most cases through an open bidding process.

"These are important steps," said Naqvi, "because we want to make sure, as the stewards of public assets, that public good and public interest is always front and centre before it's being turned over to a private developer."

A conceptual design of a redevelopment of the Jackson Building by the task force. (EVOQ Architecture)

That doesn't change his impatience.

"We need action now. We need to make sure that there's something happening with these buildings," he said. "It is not feasible for me to wait six, seven, eight years before that work could begin."

Naqvi is seeing progress on other properties, notably through Canada Lands Company, a Crown corporation whose responsibilities include developing former federal sites. The Wateridge Village development on a former air force base is already home to about 1,000 people.

Other Canada Lands Company projects have lengthy timelines. Construction on the expansive Confederation Heights site, which includes the Sir Charles Tupper Building, is currently forecast for 2027 or beyond.

Naqvi said those projects also need to be sped up too, even if it isn't easy.

"There's some technical reasons for the timelines," he said. "If you look at Tunney's Pasture, a lot of those office buildings are still being used. So unless and until we find other spaces for those workers and relocate them, that will take time."

Show us the money, says councillor

PSPC is responsible for about a quarter of the federal government's real estate holdings, with office space making up the overwhelming majority at about 6.2 million square meters. More than half is in the Ottawa-Gatineau area.

Beyond the 10 properties on the disposal list right now, PSPC didn't provide an estimate for how much of that space is unoccupied or underused.

Church said the opportunities go beyond Crown-owned buildings like L'Esplanade Laurier. He also has his eye on space the federal government is leasing, some of which, he said, is underused and could be converted into housing.

About 50 per cent of PSPC leases are set to expire in the next five years.

Naqvi said said an ongoing review of the government's space needs in light of the move to hybrid work should provide more clarity.

"Once that is done, I think we'll have a better understanding of if there's any other surplus properties or not," he said.

"My focus right now is the properties that have already been identified as surplus properties. That list is out. Let's get the process expedited so that they could be in the market."

Somerset Coun. Ariel Troster says it could be an expensive proposition to convert former federal properties. (Francis Ferland/CBC)

Troster is hoping federal money will be part of the package.

"It's not cheap to convert," she said. "It's not a gift I think we should accept from the federal government without the funding to do something visionary with it."