The Business Beat
By Daniel Huot
The federal government has slashed over 53,000 jobs over the past few years. The workforce has been reduced drastically and fewer people are required to perform government jobs.
That’s why many of you are going to ask why the federal government is increasing its office space in the National Capital Region as well as in Centretown if it hires fewer workers.
Well, that’s all part of a master-plan. The federal government needs more office space in order to reduce the amount of office space it actually occupies.
Buildings that will accommodate the reduced federal work force need to be renovated. If offices are designed to accommodate 20 people suddenly need to accommodate 40, then changes have to be made.
Thus the employees staffed in the buildings being renovated are transferred to other offices in Centretown as well as across the region.
Some analysts say the federal government’s move is helping keep office vacancy rates low. In Centretown, a Royal LePage survey found that only 2.3 per cent of top-class office space was vacant. That means landlords can expect to secure profits from federal leases.
Analysts say landlords prefer signing leases with the federal government because it secures their revenue. Newcoming businesses aren’t always able to compete with the feds because they don’t offer as much security to landlords.
If a newcomer wants premium office space in Centretown, it only has 1557 sq. m to choose from according to Royal LePage’s survey.
Yet because the present occupation rate is considered artificial, it is better for businesses to wait for rents to drop and office space to increase before signing any leases. It is expected that many Centretown offices will become vacant as the feds consolidate their buildings by 2001.
This could have a potential impact upon the price of offices. Analysts say the currently low vacancy rates are not expected to last very long if the federal government’s leases are temporary.
According to one source, at least 36,000 sq. m of office space could become available in Centretown in the near future on Albert and Cooper streets.
Now that the feds are promising to cut back 288,000 sq. m of office space in the National Capital Region, one could expect a looming disaster to strike Centretown if businesses don’t strive to acquire office space and landlords don’t favour them.