Of Capital Interest - November
Produced by Juteau Johnson Comba Inc.
Real Estate Advisors and Appraisers
Editor: John Comba

I know that this letter is long overdue but getting the appraisal reports out on time has taken precedence. Based on our experience the Ottawa real estate market is very active and should continue to be so for the upcoming year. The drop in the share prices for both Nortel and JDS Uniphase has not stopped the growth of the photonics industry. Yesterday, a new photonics company Zenastra announced plans to construct a 100,000 square foot facility for 500 workers in the Terry Fox Business Park to the immediate north of the new Nortel plant which is undergoing an expansion. The demand for high speed internet is not going to stop! We are only at the beginning of this new technology and the Ottawa area has one of the highest concentration of photonics workers in the world. We expect there will be more announcementsof new construction for photonics companies in the coming year.

Ron and I will be at the Real Estate Forum in Toronto next week and are looking forward to seeing any of our subscribers who might be there. The next newsletter will be completed towards the middle of December.

Now onto a summary of the sales that occurred in September and October.

SALES

Trizec Hahn Corporation sold Place Bell, a 985,000 sq.ft. OFFICE building located at 160 Elgin Street for $163,000,000 or $165/sq.ft. The purchaser was Le 160 Elgin I Inc. and Le 160 Elgin II Inc.

1 Stewart Street, a 25,334 sq. ft. office building was sold by Human Life International Inc. to The University of Ottawa for $1,650,000 or $65/sq.ft. This property was most recently transferred in June of this year for $1,595,075.

A two-storey office building at 57 Auriga Drive was sold by The Manufacturers Life Insurance Company to 1222064 Ontario Inc. for $1,850,000 or $76/sq.ft.

STM Developments Ltd. sold a two-storey office building at 2220 Walkley Road to Walkley Investment Properties Ltd. for $5,200,000 or $65/sq.ft.

An 18 unit APARTMENT building at 388 Carmen Avenue in Vanier was sold by Denis & Luce Paquette to Gignul Non-Profit Housing Corporation for $600,000 or $50,000/unit.

Three, 6-unit apartment buildings at 1366 & 1372 Trenton Avenue and 1377 Kingston Avenue were sold by Janice, Arlene and Beatrice Greenberg to Rosangela and Marilena Guerra for $900,000 or $50,000/unit.

There were no significant RETAIL or INDUSTRIAL buildings sales to report on.

A 16,656 sq.ft two-storey elementary SCHOOL located at 780 Church Street was sold by le Conseil Scolaire de District Catholique du Centre-Est de l'Ontario to Les Filles de la Sagesse d'Ontario for $665,000 or $40/sq.ft.

The market for vacant LAND continues to be very active. Arnon Corporation purchased a 8.5 acre site in the Centrepointe neighborhood from the Regional Municipality of Ottawa-Carleton for $1,910,336 or $225,648/acre.

MBNA also purchased approximately 5 acres of vacant land adjacent to the office building they recently purchased from Glenview Corporation at 1600 james Naismith Drive. The land was purchased from the City of Gloucester for $1,357,930 or $271,586/acre.

Chisos Investment Company sold a 2.45 acre industrial site on Innes Road in Cumberland to D.I.R. Investments for $600,000 or $244,898/acre.

A 14.6 acre industrial site at the northeast corner of St. Joseph Boulevard and Trim Road was sold by CMLQ Investors Company to 1427420 Ontario Inc. for $615,000 or $42,123/acre.

Brookfield Homes Ltd. sold a residential development site of some 80 acres along Shirleys Brook Drive to Tenth Line Developments Inc. for $6,966,303 or $87,079/acre.

A 7.45 acre commercial site south of Innes Road across from Costco was sold by Laidlaw Transit Ltd. to Primeline Investment Ltd for $2,000,0000 or $268,500/acre. The site is to be improved with a United Furniture store and retail plaza. Steve Lerner of Primecorp is leasing the retail space in the centre.

The Estate of James Norman Davis sold a 86.35 acre rural site on Eagleson Road in Kanata North to 1408648 Ontario Inc. for $2,200,000 or $25,478/acre.

A 2.12 acre site on Berrigan Drive in the south end of Nepean was sold by Jock River Farms Ltd. to 1394824 Ontario Inc. for $715,913 or $337,535/acre.

Nortel Networks Ltd. has been very busy assembling land at the southeast corner of Fallowfield Road and Highway 416 in the south end of the region. They have purchased approximately 148 acres under four deeds at an average cost of some $122,500/acre.

Loblaw Properties Ltd. purchased a 21,000 square foot site at 381-385 Marguerite Avenue in Vanier for $1,000,000 or $48/sq.ft. Loblaw's owns the adjacent property and is redeveloping the two sites and constructing a new superstore on the combined properties.

A 5.965 acre site on Royln Avenue and Hiawatha Park Road in Gloucester was sold by the Estate of Sam Greenberg to 1238605 Ontario Inc. for $1,850,000 or $310,142/acre.

A 11.5 acre site on the west side of Eagleson Road to the south of the Kanata South Business Park was sold by 1230374 Ontario Ltd. to North American (Kanata) Corporation for $750,000 or $65,217/acre. The site is to be developed with a new 100,000 to 115,000 sq.ft. Loblaws store.

Land values continue to escalate in Kanata. A 25 acre site at Terry Fox Drive and Highway 417 was sold by 1394868 Ontario Ltd. to PCM Kanata South Inc. for $6,873,625 or $274,945/acre. This site was purchased in March of this year for $5,000,000 or $200,000/acre. If anyone is interested this would be equal to 5% per month for a time adjustment. I don't know how much longer that rate can continue.

Wendy's purchased a 55,931 sq.ft. site on Walkley Road to the west of Conroy Road from 1374441 Ontario Inc. for $800,000 or $14.30/sq.ft. Imperial Oil purchased the corner site from the same vendor for $1,135,000 or $18.50/sq.ft.

Wendy's also purchased a 51,735 sq.ft. site on the south side of Hunt Club Road to the east of Merivale Road for $620,748 or $12/sq.ft. from Springcress Properties Inc. The Ottawa Goodtime Center Limited also purchased a 39,250 sq.ft. from Springcress adjacent to the Wendy's site at $12/sq.ft.

Lastly, A.G. Reed Ltd. sold a 4.744 acre site on Westbrook Road in the West Carleton Industrial Park to Oz Optics Ltd. for $593,053 or $125,000/acre.

NEWS

The Ottawa airport is to be expanded in the next three years at a cost of some $300 million. This is needed and long overdue.

According to the Ottawa Citizen a total of $752.6 million has been invested by venture capital firms in Ottawa area companies during the first nine months of this year. This compares to last year when total venture capital funding was at only $220 million. The article also noted that "In October so far, more than $110 million worth of venture financing has been announced"

The very next day the Ottawa Citizen also had an article quoting Antoine Paquin who said "I think it is safe to say, the markets for venture capital are likely to tighten up in the next few months....They will tighten up not only for the amount of capital that is available but also in the valuations caused by acquisitions." Mr. Paquin was co-founder of Skystone Systems, which sold to Cisco Systems in 1998 for $89.1 million U.S., and chief executive of Philsar, sold to Conexant for $220 million U.S. later that year.

Royal LePage's September 2000 Office Vacancy Survey is available and reports an overall vacancy rate of only 2.3% for the whole region. The lowest rate is for the Suburbs west which had a rate of only 1.3%, then downtown at 2.2%, and the suburbs east at 3.2%. The overall rate for Class "A" space is at 1.0%.

The BOMA office survey that is prepared by jj Barnicke is also completed and noted that the overall vacancy rate was only 2.1% including space for sublet. The lowest rate is the City of Kanata where a 0% vacancy level is reported for all classes of space. The only way to lease space in Kanata is to have it built and there is some 1.56 million sq.ft. under construction inKanata of which some 680,000 sq.ft. is expected to be completed in the fourth quarter.

According to the Ottawa-Carleton Real Estate Board, there were 992 residential units sold in October bringing the total for the first ten months of the year to 11,293 as compared to 9,983 for the same period last year. The average price so far this year is $158,404 which is 6% higher than last year.

Palladium Development Corporation has two, three-storey office buildings totaling some 143,000 sq.ft under construction to the east of the Corel Centre. Both buildings have been leased to single tenants.