The Peace Tower on Parliament Hill in Ottawa.Sean Kilpatrick/The Canadian Press
It's an extensively renovated heritage gem in a sought-after downtown neighbourhood with stunning river and city views.
But that doesn't necessarily make Parliament Hill's Centre Block a great real estate find.
The market value of this national treasure is less than you might think at $87.9-million, according to a new estimate by the Altus Group, a Toronto-based real estate consultant.
The value is a fraction of the hundreds of millions of dollars the federal government has already spent on renovations since 2007, and plans to spend in the next few.
"It is an iconic building, a heritage building, like the White House or 10 Downing Street," pointed out Colin Johnston, president of Altus Group's research and valuation practice. "At the root, it still is an office building and that's what we valued it at."
The estimate, which includes the underlying land value, is based on the Centre Block's revenue-generating potential as Ottawa office space.
Altus pegs the Centre Block's value at $244 per square foot, based on rents of roughly $16 per square foot. Rents in benchmark buildings in downtown Ottawa are $25 to $28 per square foot.
Newer buildings are more efficient and offer tenants better amenities, Mr. Johnston explained. "That accounts for some of the difference in rents," he said.
The Centre Block's valuation compares to benchmarks of $537 per square foot in Vancouver, $517 in Calgary and $489 in Toronto.
The Parliament buildings, including the Centre Block with its Peace Tower and 19th century library, are in the midst of a 25-year, $5-billion renovation. Roughly $1-billion has already been spent.
"A building that's 150 years old is going to require constant upgrades, and the pure replacement cost would be very high," Mr. Johnston said. "It's like a home. You have to keep investing to keep the value up."
The experts on the W Network's popular Love It or List It real estate show would be hard-pressed to make a compelling case for selling the property after so much has been spent that Ottawa has no hope of recovering.
From a pure revenue potential, the government might be better off knocking the Centre Block down and starting over.
The Gothic Revival structure was originally built in the 1860s at a cost of $1.4-million. Everything except the library was destroyed in a 1916 fire. The existing Centre Block, including the Peace Tower, was completed in 1927 at a cost of $11-million.
Altus estimates that the Centre Block's value has increased 138 per cent since 2000, when it was worth $36.9-million.
That's roughly the same as the increase in average Ottawa home prices, which are up 131 per cent per cent over the same period – to $363,938 from $157,403, according to Canadian Real Estate Association figures.
And Altus predicts the Centre Block will continue to increase in value if the government makes regular investments.
"Investments in the property, if done regularly, correctly and focused on the right areas, will cause its value to increase," Mr. Johnston said. "The Centre Block is no different and should never be considered a dormant asset."
Altus Group's Centre Block valuation is the first in a series of planned estimates of Canadian landmarks.