Bell Canada's building at 110 O'Connor St. (Darren Brown, OBJ)

The federal government is looking to secure up to a third of the 190,000 square feet of downtown office space to be vacated by Bell Canada later this year, sources have told OBJ.

The telecom giant is consolidating its Ottawa operations this fall and will move out of 110 O'Connor St., where it occupied the bulk of the 14-storey office building.

Bell's O'Connor Street employees, who numbered in the hundreds and primarily performed corporate functions such as government relations, regulatory affairs and communications, will mostly be moving to the 27-storey Place Bell at 160 Elgin St., across from the courthouse, said Bell spokesperson Jacqueline Michelis.

Bell, which has between 2,500 and 3,000 Ottawa employees, also occupies a property at 360 Lisgar St.

Although Ms. Michelis said Bell will be out of 110 O'Connor St. later this year, a property description prepared by GE Real Estate Equity lists the property as not being available until Oct. 1, 2009.

The 38-year-old building, renovated in 1998, is currently listed as class-B office space.

Ten floors, at roughly 14,000 square feet each, are listed as being available in 2009. Floors five through seven, currently occupied by Bell and totalling about 42,300 square feet, are not included in the listing.

The Department of National Defence is said to be close to signing a lease for about 30,000 square feet in the building, which is located between Slater Street and Laurier Avenue.

Officials from GE Real Estate and Public Works and Government Services Canada did not respond to questions by last Friday.

Bell is moving out of 110 O'Connor because its lease is expiring and the company has surplus space on Elgin Street, said Ms. Michelis.

She added the move is unrelated to last week's announcement that the telecommunications company plans to cut 2,500 management positions in advance of the $52-billion takeover of the company later this year.

Bell budgeted $77 million last year to relocate employees and close real estate facilities no longer needed across its operations due to workforce reductions dating back to 2004, according to the company's 2007 annual report.

The figure includes $16 million for Bell's plan to relocate employees to campus environments in Calgary, Toronto and Montreal, where employees are leaving the downtown core to go to a roughly 600,000-square-foot campus on Nuns' Island later this month.

Roughly a year and a half ago, Bell was said to be eyeing a similar consolidation in Ottawa and was hoping to occupy the Nortel campus in Nepean, but talks fell through.

Ms. Michelis said there are no immediate plans to consider a campus-style development in Ottawa and said she expects Bell's local operations to be centered around 160 Elgin St. for the foreseeable future.

However, one industry observer said he wouldn't be surprised to see further cost-saving consolidations at Bell, either into a single building or a complete exit from the downtown core.

The vacancy left by Bell is one of several properties coming onto the Ottawa market in a relatively short period of time that are collectively expected to put downward pressure on rental rates, said GVA Devencore's Darren Fleming late last month.

Minto Place's final phase now under construction at 180 Kent St. will add about 370,000 square feet to the downtown market when it is completed next spring.

Additionally, Export Development Canada will be vacating almost half a million square feet at 234 and 251 Laurier Ave. West, which is owned by Gillin Engineering and Construction, in 2010 and 2011 when it moves to the corner of O'Connor and Slater streets.

A deal to construct a new downtown tower to house EDC's corporate headquarters is expected to be finalized later this month.