The federal government will need to rejuvenate and modernize its Ottawa office portfolio as a majority of leases face expiry, says CBRE.

Most Ottawa office leases are due to expire within the next five years, said CBRE in a report. The commercial real estate services company also said the government must sell some Ottawa office properties so that they can be repurposed as affordable housing or redesigned commercial and community spaces.

Downtown Ottawa office vacancy rose to a record 15.1% in the second quarter of 2023 from 13.2% a year earlier, according to the CBRE report.

Large chunks of vacant space became available in the central business district as net absorption was negative-230,000 square feet during the second quarter. But class A rents are still holding firm despite a 150-basis-point quarterly increase in vacancy to 10.9% from 9.4%.