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An aerial view of Kanata, a western suburb of Ottawa, includes the Marshes Golf Course and surrounding developments. Minto Group plans to build more than 2,700 homes on 212 acres it purchased in April near Kanata and Stittsville. The development is expected to bolster the industrial market in the area.SkyF

A freshly minted plan to build more than 2,700 homes in suburban Ottawa is needed not just to house people but also to spur commercial, retail and industrial property development in the capital region, experts say.

Ottawa-based Minto Group plans to build the housing on 212 acres it purchased in April near the west-end districts of Kanata and Stittsville, in what is believed to be the highest-valued property deal in the city’s history. Minto purchased the land from another developer, DelZotto, for $245-million.

Draft plan approved

It will accommodate as many as 2,755 housing units, as well as commercial and retail space, according to Brent Strachan, president of Minto’s Ottawa division.

It’s getting increasingly difficult to attract skilled workers and even highly skilled workers to these cities because they’re just becoming simply unaffordable [to live in].

Aled ab Iorwerth, deputy chief economist, Canada Mortgage and Housing Corp.

“It’s rare for a piece of land this size to come on the market with draft plan approval in play,” says Mr. Strachan, explaining that it means Minto can develop housing and related non-residential buildings relatively quickly. The first phase of construction is expected to start in early 2023.

The site is “basically infill within an existing community. The surrounding area is under development right now and a lot of it is complete,” he adds. “The infrastructure is there, the schools are there, the pool and the rinks are close by, and the commercial is already there for shopping [nearby].”

The first phase will be single-family homes and townhouses, the second will add home-office residences and the entire project will include additional commercial and retail development.

Minto is primarily a home developer and adding housing stock is a key priority in communities of every size across Canada. In June, Canada Mortgage and Housing Corp. (CMHC) reported that Canada needs to build an additional 5.8 million homes by 2030 to avoid seeing average households having to spend more than 40 per cent of their disposable income on shelter.

This would require building homes at double the current pace. Boosting supply is necessary to ensure healthy commercial and industrial growth in urban areas, says Aled ab Iorwerth, CMHC’s deputy chief economist.

“It’s getting increasingly difficult to attract skilled workers and even highly skilled workers to these cities because they’re just becoming simply unaffordable [to live in],” he says.

Adding more than 2,500 homes to this part of suburban Ottawa will boost the value of industrial land in the area, says Warren Wilkinson, managing director at Colliers Ottawa.

“It helps bolster the industrial market and makes it that much more attractive,” he says. “It’s not hard to find reasons to build more industrial in Ottawa already but adding more people to the neighbourhood bolsters the value of industrial even more.

“If people want to live, play and work all in the same area, it’s going to spawn more interest.”

It’s hard to pinpoint how quickly industrial and commercial property rises in value when new houses go up, but interest in such developments in Kanata-Stittsville is likely to be intense, Mr. Wilkinson added.

“It’s one of the largest single land transactions in Ottawa, so industrial developers are bound to take notice,” he says.

Growing labour pool

According to Colliers Canada’s newest National Market Snapshot, released in late June, Ottawa’s industrial market continues to see strong demand, while supply levels remain dangerously low. The vacancy rate for industrial property in Ottawa is a tiny 1.1 per cent and space is going for $13.67 a square foot, compared with less than $12 at the beginning of 2021.

Making it easier and more affordable for people to live in the Ottawa area makes it easier to retain workers, the Colliers report notes: “Access to a larger labour pool might help keep companies from relocating from Ottawa to the St. Lawrence Seaway.”

The office market in Ottawa is not as vibrant as the industrial market, as white-collar businesses and workers “continue to adapt to the new realities of the post-pandemic work environment,” the report says.

Federal government workers make up about 20 per cent of the Ottawa area’s work force. The majority of federal workers continue to work from home and uncertainty remains about what the federal government will do with their excess office space.

The growing technology sector in Ottawa will likely lead to more demand for office space, says Susan Thompson, Colliers Canada’s associate director of research.

“In every market we track in Canada, tech is growing exponentially, and we’re starting to see that translate into employees starting to need space,” she says. “People and teams that were working out of coffee shops are saying that they need real offices now.”

The home-office units Minto is planning for the second phase of its development should fulfill some of the demand for flexible workspace that the tech sector thrives on, but how much is still an open question, Ms. Thompson adds. Employers and workers across Canada continue to be in a delicate negotiation about how often and for how long each day they should be required to show up in a building, she explains.

“We are seeing a lot of people return to offices, but the trend is still inconsistent, and nobody is quite sure yet how it’s going to work out,” she says.