Ottawa’s office vacancy rate has hit double digits at 10.6 per cent, according to the latest office market report from Colliers International.
Vacancy rates were up in all sub-markets in the second quarter of 2014, except for the fringe core – including neighbourhoods like the Byward Market and the Glebe – which remained relatively stable at 5.7 per cent. Colliers attributes the stability there to a number of high-tech companies moving into the areas.
The current tenants’ market is also putting downward pressure on the average lease rate. It’s now at $15.25 per square foot, compared with $18 in the second quarter of 2013.
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“Colliers’ forecast has been calling for a tenant market with above 10 per cent vacancy rate for quite some time, and the expectation is for the trend to continue into 2015,” said Colliers International Ottawa managing director Kelvin Holmes in a statement.
But Mr. Holmes said the silver lining is that it appears this could be the bottom of the cycle.
“The government’s plan to occupy new office space in the downtown core by 2017 and increased interest from the high-tech sector in the fringe core area do provide some early signs of optimism,” he said.
Invest Ottawa’s president and CEO, Bruce Lazenby, said there is a real sense of momentum in the city’s tech community.
“Success attracts success,” said Mr. Lazenby in a statement. “When an entrepreneur hears about a company like Shopify raising $100 million or about Cisco growing 1,800 jobs in Ontario – many, or most, in Ottawa – they recognize the opportunities for success that Ottawa provides.”
The Colliers report also noted increased lease activity in Kanata, largely due to additional space previously occupied by Blackberry.
The vacancy rate in Kanata was up from 13.7 per cent to 16.1 per cent.
The west sub-market – including Westboro and Hintonburg – saw a jump from 11.7 per cent to 15.3 per cent, thanks largely to a number of buildings added to the office inventory that hadn’t been tracked in the past. The report said the area, with all its amenities, continues to attract companies looking for younger talent.
As the federal government contines to vacate and consolidate downtown, landlords are struggling to fill the space. The vacancy rate downtown climbed from 7.3 percent to 9.5 per cent.