Canada claims tightest North American office markets
16 Apr, 2008, Toronto
Vancouver, Calgary, Toronto, Ottawa and Montreal record lowest vacancies amongst largest North American cities
Canada’s five largest cities have posted the lowest vacancy rates in the first quarter of 2008 outranking the 10 largest central and suburban office leasing markets in North America.
Vancouver, Toronto and Montreal have seen vacancy trend down through 2007, while Ottawa and Calgary have trended up.
The sharpest drop in vacancy was seen in central Montreal, where the year-over-year rate dropped 3.5 percentage points to 5.8% on strong absorption and a lack of new supply, narrowly bumping Midtown Manhattan from the top five with its 6% vacancy rate in the first quarter.
“Montreal has experienced years of virtual stagnation in the office leasing market,” said Colum Bastable, President and Chief Executive Officer, Cushman & Wakefield LePage. “But slow and steady economic growth and a lack of new development over the past decade have transitioned Montreal from a tenant market to a landlord market.”
Calgary saw the sharpest rise in vacancy, from a low of 1.4% in the first quarter of 2007 to 4.5% in the opening quarter of 2008, providing some much needed relief in that overheated market. However, Class A downtown space continues to be scarce, with just 1.8% vacant – up slightly from a year ago when vacancy registered at 0.6%.
Toronto’s vacancy rates continue to trend downward in all submarkets – and all building classes – dropping from 6.6% in the first quarter last year, to 5.6% this quarter. The suburban market (all building classes) has the lowest vacancy of the largest North American cities, at just 7.2%.
“Despite a cooling provincial economy, Toronto continues to show strong demand and should expect continued tightening of the market before any significant new supply comes online,” said Bastable. “Over 70% of space in the three new downtown office towers has now been booked, and we’re seeing a sense of urgency from tenants trying to find suitable space.”
Toronto’s suburban markets have seen strong development activity – including speculative development – and even stronger absorption figures.
“All of Canada’s major markets are well positioned to weather an economic downturn,” said Bastable. “Years of conservative and prudent development, along with low interest rates, will work to keep supply and demand in relative equilibrium – even as the economy and demand slacken.”
Cushman & Wakefield LePage is the Canadian operation of Cushman & Wakefield, the world's largest privately-held commercial real estate services firm. Founded in 1917, it has 221 offices in 58 countries and more than 15,000 employees. The firm represents a diverse customer base ranging from small businesses to Fortune 500 companies. It offers a complete range of services within four primary disciplines: Transaction Services, including tenant and landlord representation in office, industrial and retail real estate; Capital Markets, including property sales, investment management, valuation services, investment banking, debt and equity financing; Client Solutions, including integrated real estate strategies for large corporations and property owners, and Consulting Services, including business and real estate consulting. A recognized leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online Knowledge Center at www.cushmanwakefield.com.
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