Office construction ignites retail boom

By Glyn Goffin

An office building boom on Sparks Street could be the catalyst that lures retail businesses to the entire downtown core, says a real estate consultant.

Three projects on Sparks Street that are currently awaiting city approval will provide desperately needed office space, says Barry Nabatian, general manager of the real-estate consulting firm Market Research Corp.

The three projects include a broadcast centre for the CBC and a $60 million complex that a subsidiary of TD Canada Trust is developing .

The projects will expand office space in Centretown and will have retail areas on their ground levels.

“Having buildings go up will always create more retail space,” says Sharon McKenna, director of the Sparks Street Mall Business Improvement Association.

McKenna explains that even buildings that already include retail space are being redesigned to allow more merchants onto Sparks Street.

One problem with new towers going up is the immediate effects of construction.

“It can make it hard to get here and could keep people away,” says Jack Cook, owner of Canada’s Four Corners store. Cook says he hopes the store will survive the short-term inconvenience so it can cash in on the new consumers.

Sparks Street’s growth is driven by more people working in the surrounding buildings and there will be more buildings, says McKenna.

Nabatian says that’s a good thing.

“There are currently more people working downtown than ever before,” says Nabatian. “Things are getting better for Bank Street and Sparks Street businesses because of higher employment.”

Strong spending by the federal government — downtown’s largest employer and user of office space — has helped bring vacancy rates in Centretown close to all-time lows, he says .

A survey conducted by the Business Owner and Managers Association (BOMA), the vacancy rate in Centretown has dropped below five per cent, whereas more than 25 per cent of Kanata’s office space is vacant.

The survey indicated that similar office space in Centretown can be nearly $20 per square foot more costly than in Kanata.

While some government offices have moved into cheapersurburban spaces, Nabatian predicts that they will move back once new downtown offices become available.

“We’re nowhere near the building capacity of downtown,” says Nabatian. “There is currently 15.5 million feet of office space downtown and, based on current land zoning, there can be about another 5 million.”

Nabatian says it will take 20 years to reach that capacity.