Altus Group Limited

Altus Group Limited

June 12, 2012 08:03 ET

Canada's Centre Block Valued at $87.9 Million According to Altus Group

Centre Block Not a "Dormant Asset" and Requires Ongoing Investments to Retain Value Over Time

TORONTO, ONTARIO--(Marketwire - June 12, 2012) - The estimated market value of Parliament Hill's Centre Block as an office-building property in downtown Ottawa has increased by 138 per cent over the past 12 years - to a current value of $87,900,000.

In the lead-up to Canada Day, when the value of our national symbols and assets is top-of-mind, Altus Group's Research, Valuation & Advisory (RVA) Practice has estimated the value of the Centre Block. This is the first in a series of "What is This Landmark Worth?" valuations of iconic national, regional and local Canadian landmarks. The series will also highlight key economic trends affecting commercial and residential real estate across the country.

"Considered one of the most iconic heritage buildings in Canada, the Centre Block is clearly a unique building that has value beyond what can be measured through traditional real estate methods," says Colin Johnston, President of Altus Group's RVA practice in Canada. "Our Parliament Buildings, including the Centre Block, are national symbols of government, and a site of architectural beauty and historic significance," explains Johnston. "However, the Centre Block is also an office building and influenced by factors and trends affecting the broader market."

The Centre Block, which includes the Library of Parliament and the Peace Tower, is located at 111 Wellington Street in Ottawa. Occupying a portion of the easterly section of the Parliamentary Precinct (bounded by Wellington Street to the south, Bank Street to the west, the Ottawa River to the north and the Rideau Canal to the east), the buildings and grounds have strong historical associations, an impressive Gothic Revival architectural design and detailing, and status as a national landmark.

The original Centre Block was constructed between 1860 and 1866, with the Library completed in 1876. With the exception of the Library, the building was destroyed by fire in 1916 and reconstructed in 1922. The Peace Tower was added in 1927. The cost to build the original Centre Block was $1,373,633 at 1866 rates; the original budget was $300,000. The cost of building the new Centre Block after the fire was close to $11,000,000, compared to the original budget estimate of $5,000,000.

Centre Block Value Grows By 138 Per Cent Over 12 Years Due to Robust Real Estate Market

Altus Group's research estimated the Centre Block's current market value at $87,900,000, 20 per cent higher than its estimated value in 2007 ($73,100,000), but 138 per cent higher than in 2000 ($36,900,000). Between 2000 and 2007, the value of the Centre Block grew by 98 per cent.

"The Centre Block's increase in value as an office building reflects an increase in rental values in Ottawa, combined with a general improvement in investment market conditions for commercial real estate," says Johnston. "Although the amount of downtown office space in Ottawa has grown 20% over the past decade, demand has outpaced supply, helping to drive up rental rates. Investment demand also informs pricing, and Canada's position as a low-risk and transparent investment environment - in combination with readily available low-cost borrowing - ensures a robust commercial real estate market."

As with All Buildings, Ongoing Investments Required to Ensure Centre Block Holds Its Value

Given current real estate trends, the value of the Centre Block is expected to increase in the next five to ten years, according to Altus Group. However, like other buildings, regular investments are needed to preserve and enhance its value.

"The Centre Block is aging and needs capital invested to refurbish and upgrade it so that it can retain and grow its value," says Johnston. "Just as a homeowner would be advised to enhance the value of their property, the same holds true for commercial properties. Investments in the property, if done regularly, correctly and focused on the right areas, will cause its value to increase. The Centre Block is no different and should never be considered a dormant asset."

Centre Block Valued at Lower End of Benchmark Office Buildings in Major Cities Across Canada

A common measure for office buildings is the per square foot value of the "rentable" areas of that building. For the Centre Block, that measure is currently estimated at $244.

By comparison, benchmark office buildings located across the country featured in the Altus InSite Investment Trends Survey, conducted in the first quarter of 2012, were estimated to have the following average values:

  • Vancouver ($537)
  • Calgary ($517)
  • Edmonton ($373)
  • Toronto ($489)
  • Centre Block ($244)
  • Montreal ($354)
  • Quebec City ($236)
  • Halifax ($256)

About the Methodology Used to Value the Centre Block

Altus Group estimated the market value of the Centre Block using the "direct capitalization" approach. This involved dividing stabilized annual net income by a singular rate that took into account all of the comparative investment characteristics of the property. It was also based on a comparative analysis of similar properties that have recently been sold, are listed for sale or are under contract. Market rent and operating costs were estimated based on Public Works and Government Services Canada leases in private sector buildings in Ottawa's central business district while capitalization rates were estimated based on an analysis of office building sales in Ottawa and Gatineau.

About Altus Group's Research, Valuation & Advisory Practice

Altus Group's Research, Valuation & Advisory group (RVA) is the largest and most comprehensive independent real estate advisory practice in Canada. As the market leader for over 40 years, RVA provides public and private sector clients with strategic advice and information to help them make the right business decisions. RVA is supported by one of the most complete market knowledge infrastructures across North America, and has unparalleled access to data and operating practices. Advisors have a wide range of specialized skills, knowledge and experience in both local and national markets. They also have a thorough understanding of how individual market dynamics relate to national and international trends, and they consistently deliver solid, independent advice. RVA offers the following services: valuation and appraisal, legal support, decision-making support, financial due diligence, targeted research, market information and perspective, tenant satisfaction studies, industry benchmark reporting, and presentation materials. For further information, visit

About Altus Group Limited

Altus leads the global real estate industry in offering professional real estate advisory services, data solutions and intelligence about an organization's assets, generating a wealth of knowledge and insight. With a staff of over 1,700, Altus has a network of over 60 offices in 14 countries worldwide, including Canada, the United Kingdom, Australia, Asia and the United States. We operate five interrelated Business Units, bringing years of experience and a broad range of expertise together into one comprehensive platform: Research, Valuation and Advisory; Cost Consulting and Project Management; Realty Tax Consulting, Geomatics and ARGUS Software. Altus╩╣ clients include banks, financial institutions, governments, pension funds, asset and fund managers, developers and landlords and companies engaged in the oil and gas industry.

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