Canadian Office Space Market

Doug · #1 Posted **Jun 27, 2011, 7:35 PM**

Steve Ladurantaye
Globe and Mail Update
Published Monday, Jun. 27, 2011 9:20AM EDT
Last updated Monday, Jun. 27, 2011 9:24AM EDT

Canada’s office space vacancy improved in the second quarter, led by a record-setting recovery in Calgary.

CB Richard Ellis said the 8.6 per cent vacancy rate improved from 9.3 per cent in the last quarter, and was at 10.1 per cent a year ago. Tenants leased 3-million square feet of space, compared to 1.2-million square feet a year ago. The report doesn’t track rents.

“As a whole, the national trend for the office market is improving fundamentals, however, the performance of Calgary’s office market is absolutely staggering,” CBRE said in a statement. “Since peaking in the second quarter of 2010, Calgary’s vacancy rate has recovered at its fastest pace ever, down 630 basis points year-over-year to 9.4 per cent.”

http://www.theglobeandmail.com/repor...rticle2076801/

caltrane74 · #2 Posted **Jun 27, 2011, 8:01 PM**

Once The Bow comes online, those Calgary numbers will equalize. As the building is not yet in the office space count, there is a huge adjustment coming when it does get occupied, and office space shifts from older towers in the core to The Bow.

These towers will then have to seek tenants in older and less desirable properties.

Tough Sell.

jigglysquishy · #3 Posted **Jun 27, 2011, 8:05 PM**

I live in Regina

Our Class A office space is at like 0.5%

PoscStudent · #4 Posted **Jun 27, 2011, 8:42 PM**

The vacancy rate in St. John's for Class A office space was at 0% a few months back, with the vacancy rate for all other office space very low. I'm not sure if this has improved either bit.

Coldrsx · #5 Posted **Jun 27, 2011, 9:16 PM**

both bad situations... healthy markets are 5-7% vacant IMO

LeftCoaster · #6 Posted **Jun 27, 2011, 9:26 PM**

Quote:

Originally Posted by caltrane74

Once The Bow comes online, those Calgary numbers will equalize. As the building is not yet in the office space count, there is a huge adjustment coming when it does get occupied, and office space shifts from older towers in the core to The Bow.

These towers will then have to seek tenants in older and less desirable properties.

Tough Sell.

What do you mean equalize? Much of the space being left vacant by tenants filling the bow has already been spoken for. landlords dont just sit around until the space is empty to fill it, nearly all of the space opening up in Calgary is already under contract. In fact it is nearly impossible to find a 100k sf contigious space as it stands, there will be a few new office towers starting shortly.

caltrane74 · #7 Posted **Jun 27, 2011, 9:32 PM**

Quote:

Originally Posted by LeftCoaster

What do you mean equalize? Much of the space being left vacant by tenants filling the bow has already been spoken for. landlords dont just sit around until the space is empty to fill it, nearly all of the space opening up in Calgary is already under contract. In fact it is nearly impossible to find a 100k sf contigious space as it stands, there will be a few new office towers starting shortly.

I don't see it as possible, that The Bow could fill up with all the vacated tenants for other towers, an not one single new tower would have been in the pipes, otherwise, as a business, I would prefer new space, to beat up old office space built in the 1980's if that option was available.

I don't see this materializing, there will be loads of new office space on the Calgary market once the Bow opens its doors. And it will take a long time to retrofit and upgrade existing buildings before any new tenants move in.

Comon, MBA, you know the value of premium office space, and the returns on the bottom line and branding visa via setting up shop in outdated accommodations.

LeftCoaster · #8 Posted **Jun 27, 2011, 9:48 PM**

I'm actually looking at a leasing report on the calgary market as we speak... I don't know what to tell you, the market is tight. Like I said, I know of at least one major office project that could move forward in the very near future.

I was as surprised as you are when I first read the report, but that is what the analyists are saying.

Calgarian · #9 Posted **Jun 27, 2011, 9:53 PM**

Once the bow opens, I don't think that vacancy rates will go too high, maybe 12%?

It's crazy to think that there are a couple new office proposals out there and a couple DPs submitted. This city is absolutely in a league of it's own!

Coldrsx · #10 Posted **Jun 27, 2011, 10:01 PM**

Indeed it is... i am hearing multiple things going on behind the scenes.

Calgarian · #11 Posted **Jun 27, 2011, 10:32 PM**

Quote:

Originally Posted by Coldrsx

Indeed it is... i am hearing multiple things going on behind the scenes.

Does that include Canada's first supertall?

Doug · #12 Posted **Jun 27, 2011, 11:44 PM**

Quote:

Originally Posted by caltrane74

Once The Bow comes online, those Calgary numbers will equalize. As the building is not yet in the office space count, there is a huge adjustment coming when it does get occupied, and office space shifts from older towers in the core to The Bow.

These towers will then have to seek tenants in older and less desirable properties.

Tough Sell.

Downtown Calgary has leased the equivalent of the entire Bow building over the last 8 months.

Wooster · #13 Posted **Jun 27, 2011, 11:46 PM**

I think it's very likely that the second phase of Eighth Avenue Place (~700,000 sq ft) goes ahead by next year. The developer has pretty much said as much. EAP 1 went from 0% leased when it broke ground to 95% leased now - and that is 1 million square feet of space.

I could see a few other smaller ones breaking ground within 18-24 months as well, such as the one just west of the Nexen building, the "Centennial 3" building, Bow South Block and maybe City Centre.

Oil is booming, if natural gas prices increase a bit, that will accelerate things a lot more.

Wooster · #14 Posted **Jun 27, 2011, 11:57 PM**

Quote:

Originally Posted by caltrane74

I don't see it as possible, that The Bow could fill up with all the vacated tenants for other towers, an not one single new tower would have been in the pipes, otherwise, as a business, I would prefer new space, to beat up old office space built in the 1980's if that option was available.

I don't see this materializing, there will be loads of new office space on the Calgary market once the Bow opens its doors. And it will take a long time to retrofit and upgrade existing buildings before any new tenants move in.

Comon, MBA, you know the value of premium office space, and the returns on the bottom line and branding visa via setting up shop in outdated accommodations.

The buildings that EnCana and Cenovus are leaving aren't exactly C-class office spaces. Remember that for every EnCana, Shell, or Suncor there are many more small and mid-sized oil/gas service companies that can't afford the AAA space. Those companies are taking up many of these subleases.

WhipperSnapper · #15 Posted **Jun 28, 2011, 12:40 AM**

Who would of thunk it? Toronto should have three 30 plus storey towers under construction by year's end. Who knows what else will join them too. The poor surface parking/vacant lots are being attacked from all sides.

caltrane74 · #16 Posted **Jun 28, 2011, 12:41 AM**

Quote:

Originally Posted by Doug

Downtown Calgary has leased the equivalent of the entire Bow building over the last 8 months.

Wow! That's amazing and even still sitting at near 10% vacancy. Wonder what will happen when the Bow's leasee's move in and the current office space their renting goes on the market?

Any Honours MBA's wanna take a whack at that one?

I'd be tempted to say once the old unrefurbished space comes online it will be instantly absorbed.

Doug · #17 Posted **Jun 28, 2011, 1:09 AM**

Quote:

Originally Posted by caltrane74

Wow! That's amazing and even still sitting at near 10% vacancy. Wonder what will happen when the Bow's leasee's move in and the current office space their renting goes on the market?

Any Honours MBA's wanna take a whack at that one?

I'd be tempted to say once the old unrefurbished space comes online it will be instantly absorbed.

The vacancy rate dropped 6% even with EAP hitting the market during the same period. Who knows what will happen when EnCana and Cenovus exit EnCana Place, TD Tower etc. At current trend, which is only somewhat predictive. the space would lease in 8 months. Did downtown Toronto lease almost 3M sq ft in the past year?

Joshy · #18 Posted **Jun 28, 2011, 1:14 AM**

Quote:

Originally Posted by jigglysquishy

I live in Regina

Our Class A office space is at like 0.5%

Regina has the lowest in the country, and I believe Winnipeg is right behind you.

caltrane74 · #19 Posted **Jun 28, 2011, 1:17 AM**

I'm thinking those office towers will need some serious retrofitting once their current tenants vacate, which will pull that space off the market anyway.

Just because I run or manage a start up doesn't mean I'll rent any old beatup space.

trueviking · #20 Posted **Jun 28, 2011, 1:43 AM**

Quote:

Originally Posted by Joshy

Regina has the lowest in the country, and I believe Winnipeg is right behind you.

once the cons kill the wheat board there will be more office space opening up in downtown winnipeg....the canwest space at portage and main is still empty...so is some of the agricore space and now that wellington west has been bought out by national bank, im sure thats on its way out.

but we have the jets.