ErickMontreal
Oct 3, 2008, 9:02 PM
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NATIONAL COMMERCIAL REAL ESTATE VACANCY RATE FLAT; EXPECTED TO RISE SUBSTANTIALLY BY FIRST QUARTER 2010
At 3.9% Canada’s national downtown Class A office vacancy rate remained unchanged in the third quarter of the 2008 and is expected to remain near that level for 2008 and 2009. However, the coming year is the calm before the storm in terms of a low vacancy rate, because this will change dramatically at the end of next year as a substantial amount of new inventory is poised to be added to the market, driving the national vacancy rate up to about 5.9%, CB Richard Ellis Limited says in its third quarter 2008 report on the Canadian office market.
In the third quarter of 2009, approximately 3.1 million square feet of Class A office space will be added to the Toronto downtown market while Calgary will add another 720,000 square feet in three buildings, one in the first quarter and others in the second and third quarters of 2009. These additions will skew the national Class A market vacancy rate because Toronto represents about 35% of the total office market in Canada while Calgary represents 12%. No sizable amounts of new space are projected to come on the market in the coming year in Montreal, Canada’s second largest market, nor in Vancouver. To put this in perspective, the last time a large supply of new office space came on the market in downtown Toronto was 1990-92 when 6.9 million square feet was added and drove the vacancy rate up to 18.6% in 1993.
Toronto’s downtown Class A office market is 34.3 million sf and the vacancy rate for this class of space is projected to reach 12% by the beginning of 2010, the highest it has been since 2004. The new space being added is close to 9% of the total downtown Toronto Class A office market and clearly will impact on the availability of tenants to find plenty of space that suits their needs. Stefan Ciotlos, CB Richard Ellis Limited president, said that “The current low vacancy rates across Canada are making it difficult for tenants seeking officespace to find suitable space in many markets and we do not expect that to change before the end of next year. This is especially true in the large marketswhere the space in Vancouver, Calgary, Toronto, Montreal and Ottawa is extremely tight and tenants have little choice in finding sufficient space to meettheir requirements.
However, beginning in 2010 this will change as a substantialamount of existing and new space will be available, especially in downtownToronto where a large inventory will come on all at once and to a lesser degreein Calgary where the addition of the new space will be staggered over a longerperiod
“Beginning in 2010, both Toronto and Calgary especially will become a tenant market instead of an owner markets. There will be a sudden and dramatic increase in Class A office space in downtown Toronto but a slower one in Calgary because the new inventory will be added gradually.” In the third quarter of this year, Class A office markets were tight across the country except for London and the Waterloo Region. London saw its vacancy rate drop to 14.2% from 16.1% in the second quarter, a significant amount although it is a comparative small market; the Waterloo Region rose to 7.9% from 6.7% in the second quarter of the year. In the other markets, Calgary and Vancouver each recorded miniscule, almost un-measurable, vacancy rates of 2.1%. Calgary rose from 1.5% in the second quarter while Vancouver dropped from 2.9% in the second quarter. With vacancy rates this low there is virtually no space available for the majority ofcompanies seeking space so the statistical changes are not really significant,CBRE says.
Edmonton’s Class A vacancy rate was also extremely low in the third quarter, remaining about the same at 4.0% versus 3.8% at the end of the second quarter, again almost statistically insignificant. Winnipeg rose to 6.2 from 6.1%. Montreal, Canada’s second largest office market, also remained a exceptionally tight in the third quarter with the vacancy rate of only 4.3%, down from 4.4% in the second quarter.Ottawa’s vacancy rate for Class A space dropped to 2.0 from 2.2% while Halifaxrose to 4.4% from 3.5% at the end of the second quarter.
CBRE :: http://www.cbre.ca/NR/rdonlyres/9170577E-0351-4F28-97C1-6E1C0E4AB422/678974/CBRE3rdquarter2008final.pdf
NATIONAL COMMERCIAL REAL ESTATE VACANCY RATE FLAT; EXPECTED TO RISE SUBSTANTIALLY BY FIRST QUARTER 2010
At 3.9% Canada’s national downtown Class A office vacancy rate remained unchanged in the third quarter of the 2008 and is expected to remain near that level for 2008 and 2009. However, the coming year is the calm before the storm in terms of a low vacancy rate, because this will change dramatically at the end of next year as a substantial amount of new inventory is poised to be added to the market, driving the national vacancy rate up to about 5.9%, CB Richard Ellis Limited says in its third quarter 2008 report on the Canadian office market.
In the third quarter of 2009, approximately 3.1 million square feet of Class A office space will be added to the Toronto downtown market while Calgary will add another 720,000 square feet in three buildings, one in the first quarter and others in the second and third quarters of 2009. These additions will skew the national Class A market vacancy rate because Toronto represents about 35% of the total office market in Canada while Calgary represents 12%. No sizable amounts of new space are projected to come on the market in the coming year in Montreal, Canada’s second largest market, nor in Vancouver. To put this in perspective, the last time a large supply of new office space came on the market in downtown Toronto was 1990-92 when 6.9 million square feet was added and drove the vacancy rate up to 18.6% in 1993.
Toronto’s downtown Class A office market is 34.3 million sf and the vacancy rate for this class of space is projected to reach 12% by the beginning of 2010, the highest it has been since 2004. The new space being added is close to 9% of the total downtown Toronto Class A office market and clearly will impact on the availability of tenants to find plenty of space that suits their needs. Stefan Ciotlos, CB Richard Ellis Limited president, said that “The current low vacancy rates across Canada are making it difficult for tenants seeking officespace to find suitable space in many markets and we do not expect that to change before the end of next year. This is especially true in the large marketswhere the space in Vancouver, Calgary, Toronto, Montreal and Ottawa is extremely tight and tenants have little choice in finding sufficient space to meettheir requirements.
However, beginning in 2010 this will change as a substantialamount of existing and new space will be available, especially in downtownToronto where a large inventory will come on all at once and to a lesser degreein Calgary where the addition of the new space will be staggered over a longerperiod
“Beginning in 2010, both Toronto and Calgary especially will become a tenant market instead of an owner markets. There will be a sudden and dramatic increase in Class A office space in downtown Toronto but a slower one in Calgary because the new inventory will be added gradually.” In the third quarter of this year, Class A office markets were tight across the country except for London and the Waterloo Region. London saw its vacancy rate drop to 14.2% from 16.1% in the second quarter, a significant amount although it is a comparative small market; the Waterloo Region rose to 7.9% from 6.7% in the second quarter of the year. In the other markets, Calgary and Vancouver each recorded miniscule, almost un-measurable, vacancy rates of 2.1%. Calgary rose from 1.5% in the second quarter while Vancouver dropped from 2.9% in the second quarter. With vacancy rates this low there is virtually no space available for the majority ofcompanies seeking space so the statistical changes are not really significant,CBRE says.
Edmonton’s Class A vacancy rate was also extremely low in the third quarter, remaining about the same at 4.0% versus 3.8% at the end of the second quarter, again almost statistically insignificant. Winnipeg rose to 6.2 from 6.1%. Montreal, Canada’s second largest office market, also remained a exceptionally tight in the third quarter with the vacancy rate of only 4.3%, down from 4.4% in the second quarter.Ottawa’s vacancy rate for Class A space dropped to 2.0 from 2.2% while Halifaxrose to 4.4% from 3.5% at the end of the second quarter.
CBRE :: http://www.cbre.ca/NR/rdonlyres/9170577E-0351-4F28-97C1-6E1C0E4AB422/678974/CBRE3rdquarter2008final.pdf
