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National office vacancy rate up modestly in Q2 to 8.4%: CB Richard Ellis
2006-06-19 12:25:00
                       
TORONTO (CP) - The national vacancy rate for office space has risen modestly to 8.4 per cent in the second quarter of this year as demand faded in Toronto while remaining rampant in Calgary and solid in Vancouver, commercial property firm CB Richard Ellis Ltd. reported Monday.
It said tenant demand flattened in Toronto and some smaller markets - but Calgary likely has the world's tightest market for high-end downtown office space.
The overall rate was up from 8.1 per cent in the first quarter, ending nine consecutive quarters of improvement, CB Richard Ellis said.
CB Richard Ellis said demand substantially exceeds supply in Calgary, which has an overall office vacancy rate of 1.5 per cent and a mere 0.2 per cent for class A downtown space, "even lower than Tokyo which traditionally has the lowest vacancy rate of any major city."
Vancouver's vacancy rate continues to decline, standing at 8.5 per cent overall and 6.5 per cent downtown.
Nationally, "we see the fractional rise in vacancy rates more as a period of adjustment than anything else and are not concerned about it at all," stated Blake Hutcheson, president of CB Richard Ellis.
"We do not view this as the beginning of any long downward trend where demand decreases substantially. On balance, and based on our research, we see the vacancy rate for offices declining in Toronto and nationally later this year and the decline continuing in the coming year."
He added that a factor suppressing demand in some markets is that many tenants have already made commitments for office space over the past two years, taking advantage of relatively low rents.
Of the 10 cities surveyed, vacancy rates declined during the second quarter in seven: Vancouver (8.5 per cent), Calgary (1.5), Edmonton (7.3), Ottawa (6.7), Toronto (9.1), Montreal (12.3) and Halifax (8.8) .
Vacancy rates rose in London, Ont. (16.5 per cent) and the Waterloo, Ont. region (9.0), while Winnipeg's rate was unchanged (7.2 per cent).
The highest rents in Canada for downtown office space were in Calgary at an average $37.38 per square foot.
Next was Vancouver at $24.58, followed by Ottawa at $24.10 and Toronto at $20.28 per square foot.
"Longer term, in 2009 and 2010 we see vacancy rates rising again as new office space comes on the market but will be at manageable levels," Hutcheson said.
He noted that Calgary has 3.8 million square feet of new office space on the boards, with another two million planned to be up by 2010.
In the meantime, "Calgary tenants and landlords will have no choice but to do the best they can in a time of an acute shortage of space, the tightest we have ever seen in Canada."
Interesting that we are starting to look like a real bargain compared to Calgary, Vancouver and even little Ottawa.
2006-06-19 12:25:00
                       
TORONTO (CP) - The national vacancy rate for office space has risen modestly to 8.4 per cent in the second quarter of this year as demand faded in Toronto while remaining rampant in Calgary and solid in Vancouver, commercial property firm CB Richard Ellis Ltd. reported Monday.
It said tenant demand flattened in Toronto and some smaller markets - but Calgary likely has the world's tightest market for high-end downtown office space.
The overall rate was up from 8.1 per cent in the first quarter, ending nine consecutive quarters of improvement, CB Richard Ellis said.
CB Richard Ellis said demand substantially exceeds supply in Calgary, which has an overall office vacancy rate of 1.5 per cent and a mere 0.2 per cent for class A downtown space, "even lower than Tokyo which traditionally has the lowest vacancy rate of any major city."
Vancouver's vacancy rate continues to decline, standing at 8.5 per cent overall and 6.5 per cent downtown.
Nationally, "we see the fractional rise in vacancy rates more as a period of adjustment than anything else and are not concerned about it at all," stated Blake Hutcheson, president of CB Richard Ellis.
"We do not view this as the beginning of any long downward trend where demand decreases substantially. On balance, and based on our research, we see the vacancy rate for offices declining in Toronto and nationally later this year and the decline continuing in the coming year."
He added that a factor suppressing demand in some markets is that many tenants have already made commitments for office space over the past two years, taking advantage of relatively low rents.
Of the 10 cities surveyed, vacancy rates declined during the second quarter in seven: Vancouver (8.5 per cent), Calgary (1.5), Edmonton (7.3), Ottawa (6.7), Toronto (9.1), Montreal (12.3) and Halifax (8.8) .
Vacancy rates rose in London, Ont. (16.5 per cent) and the Waterloo, Ont. region (9.0), while Winnipeg's rate was unchanged (7.2 per cent).
The highest rents in Canada for downtown office space were in Calgary at an average $37.38 per square foot.
Next was Vancouver at $24.58, followed by Ottawa at $24.10 and Toronto at $20.28 per square foot.
"Longer term, in 2009 and 2010 we see vacancy rates rising again as new office space comes on the market but will be at manageable levels," Hutcheson said.
He noted that Calgary has 3.8 million square feet of new office space on the boards, with another two million planned to be up by 2010.
In the meantime, "Calgary tenants and landlords will have no choice but to do the best they can in a time of an acute shortage of space, the tightest we have ever seen in Canada."
Interesting that we are starting to look like a real bargain compared to Calgary, Vancouver and even little Ottawa.