Office vacancy in Ottawa's core declined in the second quarter amid less government downsizing than initially expected, according to a local brokerage firm.
The downtown vacancy rate saw "modest" demand with vacancy declining 20 basis points to 5.8 per cent, according to statistics released by Cushman & Wakefield.
The Bank of Canada's need for swing space during a five- to seven-year renovation of its headquarters will soon take up a further 375,000 square feet, Cushman & Wakefield forecast. That department is currently located on Wellington Street between Bank and Kent streets in a building with 836,000 square feet of space. The original centre tower was constructed in 1937-38.
Cushman & Wakefield stated the drop in vacancy in Ottawa, already one of the tightest in the country, came at the same time that initial government projections of downsizing were reduced at the time of the budget.
"The federal government has established its downsizing target at 19,000 job cuts nationwide – much lower than originally expected, and this is of course welcome news," stated Nathan Smith, the firm's senior vice-president of capital markets.
Ottawa MP John Baird said in March that Ottawa would see 4,800 job cuts in the next two to three years.
In the suburbs, the vacancy rate fell by 20 basis points to 8.7 per cent. Class A space saw more demand, with vacancies in that category falling by 50 basis points to 8.4 per cent across the city.
In a forecast released after the first quarter of 2012, Cushman & Wakefield said it expects overall vacancy will rise as 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.