Feds look to offload office space faster, open military properties for housing

The federal government is committing $1.1 billion over the next 10 years to offload its office holdings more quickly, as part of a plan it hopes will spur housing conversions in Ottawa and beyond.

That came in the federal budget on Tuesday, which also announced plans to transform a former Ottawa military hospital into housing and lease land to build more homes on a shuttered east-end air force base.

Public Service and Procurement Canada has already set a target of cutting its office portfolio by up to 50 per cent. It has nearly 65 million square feet of floor space, most of it in the National Capital Region, and estimates about half is now underused or vacant.

The new funding is meant to "accelerate the ending of leases" and cover the cost of deferred maintenance to help reach that target. 

"This would enable more office buildings, particularly in urban areas, to be converted into homes for Canadians, while also ensuring the responsible use of government resources," the budget says.

Saving $3.9B over 10 years

The government expects that reducing the federal office footprint could save it $3.9 billion over 10 years, paying for the outlay of $1.1 billion many times over. 

There's no guarantee that all that office space will be converted into housing, and some property could simply reenter the downtown Ottawa office market, adding to a vacancy rate that's currently running above 11 per cent. 

But it's clear that the federal government wants to open up as many of its holdings as possible to residential use.

"Wherever possible, public land should be used for homes," the budget says. "Moving forward, the federal government will partner with the housing sector to build homes on every possible site across the federal portfolio."

DND medical centre named

The budget mentions a few specific Ottawa properties that have the potential for housing conversions. That includes the former National Defence Medical Centre near Ottawa's General Hospital.

The 375,000-square-foot, nine-storey brick building was built between 1960 and 1961 and operated as a military hospital that also served "political VIPs." It was designated as a heritage property in 2002.

According to the budget, the defence department will work with the Canada Lands Company, a Crown corporation that redevelops federal properties, to divest the hospital and 13 other unneeded military facilities across the country.

The federal government is also planning to "urgently" lease out land at the former Canadian Forces Base Rockcliffe for 500 new homes in the growing Wateridge Village community developed by Canada Lands. About 1,000 people already live there.

The budget announces plans to "overhaul" Canada Lands Company. That includes seeking to transfer land to the company for $1 to further affordable housing projects, instead of the current practice of selling it at market rates.