Capital's office vacancy rate drops to 8.6% in Q4

Ottawa winter skyline

Ottawa’s office vacancy rate fell to 8.6 per cent in the fourth quarter of 2021 as leasing activity continued to rebound following a widespread exodus of tenants earlier in the pandemic, CBRE said Wednesday.

The capital’s vacancy rate dropped more than a full percentage point from the third quarter, when it stood at 9.7 per cent, the brokerage firm said in its latest market report. Ottawa’s downtown vacancy rate of 9.9 per cent last quarter was the third-lowest in North America behind Vancouver and Toronto.

It’s the second quarter in a row the amount of empty space in Ottawa’s offices shrank after two years of soaring vacancies when companies shifted to a work-from-home strategy to combat the spread of COVID-19.

The vacancy rate in class-A properties dipped to 7.3 per cent. The class-A vacancy rate in the downtown core fell to 6.4 per cent, down from 7.2 per cent in the third quarter. 

Despite the shrinking amount of available space, overall average net rents for class-A space fell to $17.70 per square foot in the fourth quarter. Net rents for class-A space in the core were $22.64, a drop of 64 cents from the previous quarter.

Sublet space shrinks

Meanwhile, the amount of office space available for sublet hit a pandemic low of 479,100 square feet in Q4, down from 590,000 square feet a quarter earlier.

On the industrial side, CBRE said the availability rate of industrial properties in Ottawa declined to 1.7 per cent at the end of December, down from 2.6 per cent in the third quarter. Total net absorption of industrial space soared to 3.2 million square feet in Q4, thanks largely to the completion of a 2.8-million-square-foot fulfilment centre in Barrhaven that’s fully leased to Amazon.

Net rents, meanwhile, jumped to a record $12.15 per square foot, up from $11.94 at the end of September.

CBRE said industrial tenants should expect to keep shelling out more for space throughout 2022 as supply constraints continue to drive up prices in the red-hot Ottawa market.

“Tenants looking to enter the market should anticipate competing with multiple interested parties,” the company said.