Companies continue to struggle finding class-A space in the capital as availability rates fell in Ottawa’s largest office markets in the final quarter of 2018, according to real estate services firm Colliers.
In its fourth-quarter report on Ottawa’s commercial real estate market, Colliers reported that availability rates in Kanata dropped to 10.5 per cent from 14.9 per cent in the previous quarter, thanks in large part to Mitel taking 150,000 square feet at 4000 Innovation Dr. On its way out of that building is Ford, which will become the anchor tenant at Cominar’s recently announced 100,000-square-foot development at 800 Palladium Dr.
The tightening availability in Kanata’s office market is putting upwards pressure on rental prices, with the average rent per square foot up six cents quarter-to-quarter, closing the year at $13.58.
A lack of class-A space both in Kanata and the downtown core is driving some prospective tenants – many of which are tech firms, Colliers notes – into class-B buildings.
Downtown, where the overall availability rate dropped to 6.8 per cent from 7.2 per cent quarter-to-quarter, the amount of available class-A space declined for the fourth consecutive quarter. Colliers reported that companies unable to find space in the downtown core are looking to the ByWard Market and Bank Street, driving down availability in that fringe submarket.
The downtown market saw numerous investments in the fourth quarter of 2018, with Morguard and iA Financial Group’s $186-million purchase of a 50 per cent stake in the Jean Edmonds Towers leading activity. Also making waves was Canderel with a $17.3-million purchase of the Scotiabank building on Sparks and Queen streets and District Realty with a $6.35-million deal to buy 170 Metcalfe St.
Industrial availability continues to drop
In a separate report this week, Colliers pointed to further tightening in Ottawa’s industrial vacancies.
Industrial availability dropped to a rate of two per cent in the fourth quarter of last year, one-tenth of a percentage point down from the previous quarter. Net rental rates were $10.72 per square foot, up from $10.65 in Q3.
Colliers said tenants requiring large spaces have limited choices, with just seven options for more than 20,000 square feet currently available in the market.
Southern parts of the city accounted for $15.6 million in deals in the sector this past quarter, with 90,000 square feet of industrial space trading hands. The largest deal of the fourth quarter was PROREIT’s $10-million purchase of 159 Cleopatra Dr., covering 60,000 square feet.