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National office vacancy to drop to 5.6 percent in 2008
4 Dec, 2007, Toronto
Strong demand and a lack of supply drives markets forward
The national office vacancy rate will drop from the current 6.2 percent by the fourth quarter of 2008 to 5.6 percent as major urban centres continue to see the amount of available space decline.
Cushman & Wakefield LePage’s Outlook ’08: Annual Market Review found that, of the five surveyed markets, only Calgary will see a rise in office vacancy rates in the coming year. Vacancies in Vancouver, Toronto, Ottawa and Montreal will fall.
“Calgary has had a wild ride over the past few years,” said Paul Morse, Cushman & Wakefield LePage’s Senior Managing Director & National Practice Director, Office Leasing. “We’ve seen space incredibly tight – down to 0.4 percent vacancy in the core – and now we’re seeing a healthy rebound to more manageable levels.”
Calgary’s downtown vacancy rate is projected to rise to 3.6 percent, while the suburban market will reach 6.3 percent by year-end 2008, as almost 4 million square feet of new supply comes to market.
Vancouver will record the lowest central area vacancy rate in Canada next year at just 2.1 percent, with only 80,000 square feet of new development downtown. Given this lack of new supply, tenants will likely consider options in class B or C properties, or continue leaving the core for the suburban markets.
Toronto, which represents over 40 percent of the total Canadian office market, will have projected vacancies in the central office market reach a tight 3.8 percent vacancy in late 2008, down from 6.2 percent at the end of 2006.
“We are now at the point where demand will have to slow in the Central market, simply due to the lack of available space,” said Morse. “Those expanding or entering the market are now considering space in mid-town or further into the 905 regions to meet their space needs.”
In Montreal, the vacancy rate will drop to the lowest levels since 1989/90 on continued strong absorption of available space. Vacancy, long stuck in the low double digits, will trend downwards to a healthy 8.9 percent by year-end 2008, with the downtown core hitting 7.6 percent.
“There is a great deal of optimism in Montreal with rental rates increasing, vacancy dropping and absorption levels remaining positive,” said Morse. “After years with no new
office developments, the new Nun’s Island project is an important signal that the private sector is, once again, investing in Montreal.”
Cushman & Wakefield LePage is the Canadian operation of Cushman & Wakefield, the world’s largest privately owned commercial real estate services firm with more than 12,000 professionals in 215 offices in 56 countries. The firm delivers integrated solutions by actively advising, implementing and managing on behalf of landlords, tenants, and investors through every stage of the real estate process. These solutions include helping clients to buy, sell, finance, lease, and manage assets. Cushman & Wakefield also provides valuation advice, strategic planning and research, portfolio analysis, and site selection and space location assistance, among many other advisory services. To find out more about Cushman & Wakefield, visit www.cushmanwakefield.com
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