Ottawa office vacancy rate falls to 11.7%

Ottawa

Ottawa’s office vacancy rate fell by half a percentage point in the second quarter as tenants snatched up class-A space downtown and in Kanata, recently released figures show.

Colliers International’s most recent office market report said the citywide office vacancy rate was 11.7 per cent at the midyear mark, down from 12.2 per cent at the end of the first quarter.

One of the big drivers of the decline was the high end of the downtown submarket, Colliers said.

“Class-A assets continue to dominate the interest of tenants looking in the market, a trend that is starting to spill into upper class-B offerings,” the real estate services firm said in a report.

“Millennial businesses find downtown spaces to be the most attractive in terms of amenities and transportation. Smaller companies in Kanata are starting to see this appeal and have begun to pursue downtown options as well,” Colliers added.

The firm says interest is also picking up in areas just outside the downtown core, with pockets of space between 2,000 and 6,000 square feet near the future light-rail line being highly sought-after by office tenants, particularly those in the professional services sectors.

In a developing trend, Colliers says parking is becoming less of a requirement for some tenants, particularly those staffed by younger employees. In buildings without abundant parking, many tenants are happy with on-site bike racks and showers.

Investment market

In a move that’s been rumoured for several months, Oxford Properties – the real estate arm of the Ontario Municipal Employees Retirement System pension fund, better known as OMERS – is looking to sell its three-building Constitution Square office complex.

Its eventual sale will give a major boost to this year’s Ottawa investment levels, already buoyed by the Investors Group’s purchase of a 50 per cent stake in the three office towers at Minto Place in downtown Ottawa.

“At a low five per cent cap rate, it represents the largest transaction of record for the first part of the year,” Colliers said of the Minto Place purchase.