Tenants in Ottawa’s office market are opting for renewals and relocations, rather than growth and expansion, causing an increase in vacancy rates, according to a new report.
Colliers International says the citywide office vacancy rate increased 100 basis points in the fourth quarter of 2012 to reach 8.5 per cent.
Vacancy in the downtown core climbed 110 basis points to reach 6.7 per cent, in part due to Health Canada leaving Metcalfe Realty’s 123 Slater St. Asking net rental rates in the central business district remained relatively stable.
Kanata’s vacancy rate climbed 120 basis points to 15.6 per cent. In the eastern suburbs, the Canada Revenue Agency’s departure from 35,000 square feet in Glenview’s building at 2733 Lancaster Rd. pushed the vacancy rate in the relatively small submarket up 130 basis points to six per cent.
Looking ahead, Colliers notes that many federal government leases are set to expire this year and that those civil servants are expected to be shuffled out of the downtown core. According to the brokerage firm, this offers an opportunity for landlords to renovate some of their older buildings and offer less expensive downtown options to tenants currently in the suburbs.