How Ottawa is facilitating office-to-residential conversions

Reductions in fees, streamlined approval, and a cash incentive

The Slayte, a recent office-to-residential conversion at 473 Albert. 158 apartments created, replacing 122,050 square feet of office space.

It was busy at City Hall last week: Lansdowne Park, a new emergency shelter task force, the transit route review results, and so on. In the middle of all that, our Planning and Housing Committee approved a new process to faciliate office-to-residential conversions, particularly downtown. (City Council will review the file on Wednesday.)

We approved a reduction in fees, a streamlined approval process, and a cash incentive. A summary of potential savings to developers:

• Reduction in the Official Plan Amendment Fee: $29,000

• Reduction in Zoning By-law Amendment Fee: $13,000-$25,000

• Reduced time to complete the Zoning By-law amendment process: savings of 90 days of carrying costs

• Savings on Site Plan Control Fee: $30,000

• Simplified stormwater management measures: savings varies depending on complexity

• Reduced Cash-in-Lieu of Parkland fees: Varies, but could be $100,000 or more depending on the size the project.

We left the door open to consider more cash incentives next year – but how much is a reasonable incentive? And what is it meant to do?

Reports from Colliers and the Canadian Urban Institute offer some interesting data about office rentals in Ottawa:

• 14.3%: Office vacancy rate, city-wide

• 14.0%: Office vacancy rate, downtown

• 17%: Office vacancy rate, Kanata

• 57%: Return-to-office rate across Ottawa, compared to pre-pandemic

• 42%: Return-to-office rate in downtown Ottawa, compared to pre-pandemic

• 62%: Toronto’s return-to-office rate

• 81%: Montreal’s return-to-office rate

• 11 to 17: The number of candidate buildings for conversions in downtown Ottawa

Calgary offers developers $75 per square foot to encourage conversions, with a minimum threshold of 40,000 square feet. That’s a minimum incentive of $3-million, and they have cap of $10-million per project. (Mind you, Calgary had a vacancy rate of over 30% when they introduced the program.)

The incentives we approved last week add up to several hundred thousand dollars for most projects. Is it enough? That’s the question our committee struggled with.

There’s a clear public benefit to getting more people downtown (in offices or in homes). So we need policy that supports faster conversions and more affordable apartments. What effect would another $100,000 have on a project? Another $1-million?

Where does the money come from? One source could be rebating money that usually goes towards parks. Another source could be money from the Federal government’s Housing Accelerator Fund.

And are City incentives even necessary now that the federal government and provincial government have scrapped the GST/HST on qualifying apartment construction? That represents a potential savings of millions of dollars for builders.

Some of these projects are moving ahead even without changes to process or incentives: Between 2013 and 2022, over 700 new residential units were created from office-to-residential conversions. With the low residential vacancy rate in Ottawa, there have been more happening since the pandemic.

We’re going to meet again with builders and developers in December to work through these questions and decide how incentives can be linked to the outcomes we’re looking for. Stay tuned.

Théo, a recent office-to-residential conversion at 305 Rideau. 194 apartments created, replacing 277,938 square feet of office space.

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It gets even busier at City Hall this week with the release of the 2024 municipal budget, a major report on new incentives for affordable housing, and many more hours on Lansdowne. I was glad to have that extra hour of sleep this weekend.