The Ottawa real estate market is starting to be talked about everwhere you go. On the weekend I was at my god daughter's birthday party and everyone was talking about how hot the residential real estate market in Ottawa has become. This is also happening in the commercial market. The following headlines from Saturday's Ottawa Citizen may explain many of the reasons our market has been performing so well:

"Ottawa Hull jobless rate down sharply"

"Growth puts squeeze on small techs: Small high-tech companies area being hit by the shortage of office space, especially in the west end"

"Cognos sets pace as techs lead TSE higher"

"It's a white hot market: Ottawa leads the country in single home sales."

These headlines, together with the headline in last Tuesday's (April 4) Globe and Mail "Ottawa facing painful space crunch", indicate that it is a good time for property owners in Ottawa. Rental rates are increasing as are house prices. Those of us in the Ottawa market have seen this coming for more than a year. Now the rest of the country knows what is happening in "the Government town" known as Ottawa.

The last newsletter prompted two phone calls from real estate brokers who were overlooked. The first was from David Hurst of Jones Lang LaSalle who informed me that he and his company introduced the Glenview portfolio to Penreal. The second was from John McClelland of Facilities Commercial Realty Inc. telling me that Rick Vandenbelt of his office sold 2540 Lancaster Road. Sorry for the oversight guys.

Valuation in the office market is becoming similar to the stock market where buildings with no income because they are empty might be more valuable than buildings with income. The empty buildings can be leased at market (where rental rates are still increasing) but the building with income which might be leased at rental rates below market with limited rollover in the short term must be valued on the basis of the existing income stream.

Now onto the February sales which were few and far between. This in my view is more due to a lack of supply than demand.

SALES

A vacant two-storey, 15,000 sq.ft. walk-up OFFICE building at 1575 Carling Avenue was sold for $1,500,000 or $99/sq.ft. This is the former offices for a local radio station, Magic 100. The vendor was Kathed Holdings Inc. and the purchaser was 1252339 Ontario Inc. Sakto Developments is now marketing the building.

A 3,900 sq.ft. heritage office building at 324 Somerset Street West was sold by Evelyn Gowland to M. Anvari Enterprises Inc. for $310,000 or $79/sq.ft.

The 69,950 sq.ft. office building at 2197 Riverside Drive was sold by 2197 Riverside Drive (Ottawa) Inc. to Riverside Towers Ottawa Inc. for $1,800,000 or $25.73/sq.ft. The square footage includes 6,885 sq.ft. of office space in the basement. This property sold December 31, 1997 for $1,600,000. It is a 30 year old Class "C" building that has 127 on-site parking spaces.

The largest INDUSTRIAL building transaction in February was the purchase by Shenkman Corporation of 44 Iber Road in Stittsville (this is just west of Kanata for those not from the Ottawa area) from Plaintree Systems for $1,150,000 or $54.75/sq.ft. This 21,000 sq.ft. building has since been leased to JDS Uniphase.

An 11,442 sq.ft. building at 217 Colonnade Road in Nepean was sold by Gisburn Developments Limited to Shaver Business Products Limited for $660,000 or $58/sq.ft. It was purchased for owner occupancy.

The APARTMENT market was very quiet with only one sale of a 15 unit apartment building at 225 Lebreton Street North in Ottawa. The vendors were Donald and Donna Irwin and Neil MacDowall to Ottawa Salus Corporation. The purchase price was $595,000 or $39,66/unit. Randy Stevenson of District Realty was the agent on this transaction.

The market for VACANT LAND was fairly active with the following sales.

The Manufactures Life Insurance Company sold their interest in a land lease at 1525 Alta Vista Drive to The Regional Group of Companies Inc., in trust for $1,054,400. The land lease was for a 3.48 acre that is improved with a 250-unit rental apartment building. The transaction is based on $302,988/acre or $4,216/unit.

The Canadian Blood Services sold a 5.925 acre site at the northwest corner of Smyth Road and Alta Vista Drive to The Canadian Medical Association for $1,575,000 or $265,823/acre. The CMA has offices on theopposite side of Alta Vista Drive and this was purchased for expansion.

Land values continue to increase in Kanata. CIBC Development Corp. sold their 12.667 acre site at the intersection of March and Solandt Roads to RT Twenty-Second Pension Properties Limited for $3,801,000 or $300,071/acre. This is the same site that they purchased in April 1998 for $2,667,000 or $210,547. I guess NASDQ is not the only place to make money. RT Properties and Colonnade are in the process of constructing a five-storey, 83,000 sq.ft. Class A office building on this site.

A 10.166 acre residential site on the south side of Corkstown Road in the west end of the region was sold by Gerald and Earl Thomas to Uniform Urban Developments Inc. for $1,850,000 or $181,972/acre. The purchaser will be constructing 50 single family homes a few minutes east of NORTEL's local head office. These should sale fairly quickly.

NEWS

The local unemployment rate decreased in March from 6.1% to 5.9%. Compared with last year there are 31,200 more people with jobs. Healt care and social services had the biggest gains with over 3,400 new jobs Educational services posted the largest decline with 2,600 job losses.

According to the Ottawa-Carleton Real Estate Board, there were 986 properties sold in February compared with 760 sales in February 1999. The average price was $157,447 which was 8.7% higher than last year.

New home sales in March were at 502 units which was 13% over the record set in February and 29% higher than last March. For the first three months of 2000 new homes sales are 43% ahead of last year.

The residential market is performing so well that Domicile Developments is constructing a new 42 unit condominium at 365 Cooper Street. In the first weekend 18 of the 42 units that are priced from $159,900 t0 $354,900 were sold.

Claridge Homes is also constructing a 48 unit condo project at 125 Wurtemburg overlooking the Rideau River. The units are priced from $280,000 to $370,000 and are 1,800 to 2,700 sq.ft. in size. Its grand opening will be in the middle of April with occupancy in the fall. Stay tuned all you condo developers.

Sid Rothman of Progeny Management is planning on constructing a six-storey 60,000 sq.ft. office building adjacent to his Market Square office building on Hearst Way in Kanata.