A new report is painting a bullish outlook for Ottawa’s office market, arguing that the city’s light-rail line is renewing investor and tenant interest in properties that will be connected to rapid transit in the coming years.
Commercial real estate services firm Avison Young said the local market can be characterized as “in recovery” heading into the second half of 2017.
“Class AA buildings had sub-six per cent vacancy at mid-year 2017, with large-block space a rare commodity,” the firm wrote in a report released Wednesday. “While the class-B market continued to struggle, it will not be long before these buildings get pulled along with the low-vacancy wave, mirroring the rise in class A rental rates as tenants realize the benefits of proximity to LRT stations in the core.”
Despite the positive outlook, Avison Young reported vacancy rates continued to tick upwards in the second quarter of 2017. Other market watchers, however, say vacancy rates declined during the quarter.
Earlier this summer, Colliers International reported 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.
Avison Young highlighted light rail as well as Shopify’s lease of an additional 325,000 square feet inside the office tower at 234 Laurier Ave., at O’Connor Street, as helping to spur a turnaround in Ottawa’s core office market.
The firm says net effective rental rates in Kanata are approaching $12 per square foot after hovering in the $8 range for several years.
“It would seem that market, like the downtown core, has started to turn the corner,” Avison Young said.