After a year of rising vacancy rates, the Ottawa office market may be set to rebound, according to the latest numbers from Colliers International released Wednesday.
The report says “healthy activity” in Kanata, the ByWard Market and the Glebe helped the city’s overall vacancy rate drop from 10.6 per cent to 10 per cent in the third quarter of 2014.
While those submarkets saw vacancy rates fall, and consequently asking rent go up to around $17.25 per square foot, the story is not the same in the downtown core, according to Colliers.
Colliers says downtown vacancy rates continue to rise, especially in Class B and Class C buildings, largely due to federal government downsizing. The downtown submarket’s vacancy rate now sits at 9.9 per cent.
Lease rates, however, have increased to $21.50 per square foot, one dollar higher than last quarter.
Colliers says it expects downtown vacancy rates to go as high as 12 per cent in the next two years, even as average vacancy rates across the city decline overall.
Colliers managing director Kelvin Holmes says it’s not all doom and gloom for the downtown core.
“There’s a potential silver lining in this challenging situation as it presents an opportunity for the private sector to step in and fill the void,” he said in a statement. “The abundance of office space in the city’s core creates an opportunity for private sector companies to upgrade their premises and move closer to the centre, where public transportation, retail and other amenities are within reach for their employees.”
Colliers also released its industrial vacancy rate numbers, showing vacancy rates falling to four per cent from six per cent in the previous quarter.
“With limited new supply expected in the pipeline and minimal expansion opportunities, Ottawa’s industrial market is expected to be a safe harbour for landlords and possibly an attractive option for investors,” Mr. Holmes said.