Ottawa’s office market continued to tighten in the first half of the year, with vacancy rates reaching their lowest levels since 2011, according to CBRE’s quarterly report on Canada’s commercial real estate markets.
The brokerage firm reported that Ottawa’s citywide office vacancy rate dropped to seven per cent in the second quarter of 2019, down from 7.5 per cent the previous quarter and 9.9 per cent a year ago. The three-month period ending June 30 marked Ottawa’s seventh consecutive quarter of decline, which CBRE attributed to increased interest in the local market with limited new supply.
The central business district was among the most active submarkets in Ottawa with a vacancy rate of 6.7 per cent – the area’s lowest point since the start of 2013. CBRE notes the unavailability of class-A space in the CBD has led some tenants, particularly urban tech firms, to compromise on class-C buildings. As a result, class-C vacancy in the downtown submarket hit a seven-year low of 11.7 per cent.
Ottawa’s east-end has been a hotbed of activity in the past year, CBRE notes. With its limited supply of space, the eastern suburbs of the city posted a vacancy rate of 9.6 per cent in the quarter, down a full 10 percentage points year-over-year.
On the other end of the city, Kanata also continued to tighten on office space. Vacancy rates hit 6.9 per cent in the quarter, the submarket’s lowest point in the past decade.
Ottawa’s industrial market saw a slight increase in availability this past quarter, with the vacancy rate rising 20 basis points to 2.4 per cent. CBRE notes that the market remains in short supply of large blocks of space, with minimal options greater than 20,000 square feet and none offering more than 50,000 square feet.
CBRE projects that new construction in this sector would require “as-of-yet untested” rent increases in the market, and predicts tenants will continue to struggle to find suitable industrial space in the remainder of 2019.