Office vacancies expected to rise

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Office vacancy rates in Ottawa edged up slightly in the first quarter, but one local brokerage firm says the statistics don’t tell the full story of how much empty space there is in the capital.

The citywide vacancy rate increased by 30 basis points in the first three months of 2012 to reach 7.4 per cent, according to numbers released by Cushman & Wakefield Ottawa. In the downtown core, the vacancy rate increased for the fourth straight quarter, climbing 40 basis points to reach 6.3 per cent.

However, neither number takes into account the 337,000 square feet of potential vacancy inside the office tower formerly occupied by Export Development Canada at 234 Laurier Ave., at O'Connor Street, the report notes.

The building is said to still house some federal employees from FINTRAC, but was mostly vacated when EDC moved its headquarters into its new office tower at 150 Slater St., at O'Connor Street.

The property's owners - Gillin Engineering and Cadillac Fairview - are spending at least $18 million on renovating the 29-year-old building, according to municipal records, but have said little about their plans.

"It remains unclear when and what amount of space is, or will be, available for occupancy," the report states.

Cushman & Wakefield said it expects vacancies to rise in the short term as a further 120,500 square feet - a third of which is located in the downtown core class-A market - becomes available over the next six months amid "lackluster" demand for space.