The post-and-beam office complex developed by Brennan Custom Homes in Gananoque, Ont., attracted its first tenant before it was even complete, with software developer Big River Technologies moving in this past September.Kayla Noakes
Set on the banks of the St. Lawrence River, the Eastern Ontario town of Gananoque is known as the “Gateway to the Thousand Islands.” It’s a popular vacation destination with a charming main street, local theatre and, until recently, a largely neglected waterfront.
The picture the town paints is one of quaint, hometown goodness. It’s perhaps the last place one would expect to find a turn-of-the-century warehouse converted into stunning post-and-beam office space. But two years ago, that’s exactly what Brennan Custom Homes Inc. opted to develop.
As a builder with offices in Toronto and Palm Beach, Fla., Brennan Custom Homes identified the need for something different in this laid-back landscape, but it was a discovery that was made almost by accident. In 2011, custom-home builder Joe Brennan bought a private five-acre island near Gananoque.
“[Over the years] we started to see a need for some first-class office space in Gananoque,” says Daniel Greenglass, chief financial officer and co-managing partner at Brennan Custom Homes, because of the town’s proximity to prominent postsecondary schools. But that’s not the reason why Gananoque first hit the developer’s radar.
The chance to fill that need came in 2012 when, in a bid to sell off property and spur revitalization, Gananoque’s Town Council passed a motion to list its brownfield land by the waterfront as surplus and to ask for a request for proposals for the site. In the summer of 2013, an agreement was reached with the Gananoque’s Town Council to purchase two sites – a storage shed at 60 Mill St. and a factory at 15 Clarence St.
Demographics prompt new development in smaller cities
The initial vision set out in the proposal submitted by Brennan Custom Homes was for a residential complex, not a commercial development. But the custom-home builders weren’t the only developers to realize the increasing demand being driven by downsizing baby boomers. There were three condo projects in varying stages of development in Gananoque, including Brennan Custom Homes’ own Riverstone complex.
That’s when Mr. Brennan and Mr. Greenglass decided to shift their focus.
Initially, the idea of building large, open-concept offices – the sort favoured by tech companies – in a vacation town with a population of 5,200 must have led to some head-scratching. But these experienced developers gambled that Gananoque had enough ingredients to attract the right tenants and won.
“It’s a combination of lifestyle, frustration with Toronto and opportunity,” Mr. Greenglass says. “Where else can you find an [idyllic] location, right between Toronto and Montreal, and on the Via Rail line?”
Brennan Custom Homes already owned a smaller storefront on the town’s main drag, but after consulting with local businesses and hearing requests for larger commercial space, the firm decided to incorporate 8,100-square-feet of contiguous office space into the existing plans for condos and townhouses at the Riverstone development.
In November, 2017, with approvals in place, Brennan Custom Homes started transforming the bare bones of the Mill Street property into a contemporary workplace. It wasn’t a straightforward project. Not much was left of the original structure, believed to date back to 1912.
“Imagine a few two-by-fours sitting on their ends with cladding on them and a roof," Mr. Greenglass says. "It was literally a wire shed.”
But the company liked the original character of the exposed beams, believing they would add something special to a completely reconstructed building, so work to gut the shed began.
First tenant likes easy access to potential employees
Before the 10-month project was complete, Brennan Custom Homes had secured its first tenant. Software developer Big River Technologies Inc. moved into their new office space this past September, just as the project was wrapping up.
Big River Technologies had set up in Gananoque two years earlier, but needed more space for its growing staff. “The idea was to attract younger people, maybe high-tech business, technology companies, that kind of thing,” Mr. Greenglass says.
John Free, chief executive of Big River, says there were a number of reasons his firm, which now employs more than 70 people, chose to settle here. “I guess you could look at it as a fairly interesting locale to choose, but other areas are already well developed and saturated and also have higher internal cost structures,” he explains. Mr. Free points out that his new office is relatively close to several postsecondary institutions, making talent recruitment easier. Concordia, McGill, Carleton and Queen’s are all universities within reach, as are three major colleges: Algonquin, Loyalist and St. Lawrence. Plus, the “idyllic” nature of the town helps to retain that talent, he adds.
It also doesn’t hurt that housing costs here are considerably lower than in major centres. According to the Kingston and Area Real Estate Association, the average selling price of a detached home in Gananoque in July was $252,140, compared with $1,227,301 in the city of Toronto per data from the Toronto Real Estate Board.
Smaller cities offer a lot to both employers and workers
According to Ray Wong, vice-president of data operations for the Canadian commercial real-estate services company Altus Group Ltd., Gananoque is not the only market of its kind that is attracting interest from the tech industry.
“We are seeing this happen in Kelowna and Victoria in B.C., as well as in Hamilton, Ont.,” Mr. Wong says. “[This growth is] based on the new flexible workplace and the high cost of office rent in the major markets.” Then there are the high housing costs in Toronto and Vancouver.
Available for lease at $25 a square foot, Mr. Greenglass believes the main floor of 60 Mill St. is undervalued and wants to establish a new benchmark for the project.
“People look at it initially and say, ‘Well, that’s just way too much.’ But we’ve proven the price is viable because we got the Big River [firm] in place,” he says. “You build the right product, people will come.”
By comparison, as of the first quarter of the year, average net asking rent for similar office space in Toronto was $29.33 a square foot, compared with $13.70 a square foot in Montreal and $17.42 in Ottawa, according to research from commercial real-estate company Jones Lang LaSalle Inc.
Tourism has traditionally been Gananoque’s main industry, but the town hopes to work with more developers to attract additional business investment, particularly from the tech sector. The town is wired for fibre-optic internet, and officials have identified a need for more office space.
“You can feel how Gananoque is on the cusp of taking it to the next level,” says Cyril Cooper, an economic development consultant and former director for business development at the Kingston Economic Development Corporation.
Mayor Ted Lojko confirms there have been a lot of inquiries from businesses looking to set up shop since the completion of the Mill Street property. “It’s become a catalyst,” he says.
Mr. Greenglass confirmed that his company would be interested in building more office space on the land it now owns, depending on demand.