The office vacancy rate in Canada’s capital has hit 10.6 per cent, according to the latest office report released by Colliers International.
Vacancy rates were up in all sub-markets in Q2 of this year, except for the fringe core, which includes neighbourhoods like the Byward Market and the Glebe. These were “relatively stable”at a rate of 5.7 per cent.
The average lease rate in the city is now sitting at $15.25 per sq ft. In the second quarter of 2013 it was $18.00.
Colliers International Ottawa managing director Kevin Holmes stated that the consultancy has been calling for a tenant market with a vacancy rate of more than 10 per cent for some time.
It is forecasting that the trend will continue into 2015. According to Mr. Holmes, it appears that the cycle could have bottomed out at this point.
He says that the government’s plans to move into new office space in the downtown core by 2017, and indications of interest from high-tech businesses in the fringe core area, are providing “early signs of optimism.”
The report also notes increased lease activity in Kanata, most of it due to additional space previously occupied by Blackberry. The vacancy rate in Kanata increased from 13.7 per cent to 16.1 per cent.
The west sub-market, which includes Westboro and Hintonburg, also saw an increase in vacancy rates. A number of buildings were added to the office inventory that hadn’t been tracked in the past. According to the report, this area, with its amenities, attracts companies looking for younger talent.
As the federal government continues to vacate outlying buildings and consolidate downtown, landlords are finding it challenging to fill the space. The vacancy rate in the core increased from 7.3 per cent to 9.5 per cent.
