A newly-released study on the subject said that office space in downtown Ottawa is set to become much more easily and potentially cheaply available than has been the case in recent years as new developments come to market and major tenants vacate large premises.
Newmark Knight Frank Devencore’s report suggests that current activity and plans being laid by major employers in the city like the Public Works and Government Services Canada organisation will reshape office markets in downtown Ottawa.
“We anticipate that vacancy rates in downtown Ottawa could double – to six per cent or higher- over the next couple of years,” said Don Marks, director of advisory and corporate services for Devencore Real Estate Services.
“As a result, rental rates should soften and tenants will be presented with a greater range of opportunities,” said Marks of prospects for the office space market in downtown Ottawa.
A different picture was presented for office markets in the suburban Kanata district of the city, where 300,000 sq ft looks likely to be absorbed by the arrival of employees of the two technology groups Ericsson and Avaya, who are set to occupy space at the Nortel Campus.
“The accelerated space absorption in Kanata being driven by the Nortel exodus may be a temporary and limited phenomenon,” Marks commented. “Nevertheless, over the short to medium term, tenants seeking leasing opportunities here will have to research emerging market trends carefully.”
A report published recently by the commercial real estate advisory Cushman & Wakefield showed that vacancy rates in suburban parts of major Canadian cities fell in the third quarter of 2011 as demand for Grade A offices increased.
Editor’s notes: In Q1 2023, Ottawa’s office space vacancy rate was 12.3 per cent representing a 2.89 per cent increase year-on-year.
In the same quarter, the net absorption of office space was -482,000 square feet which compares to a 5-year quarterly average of -80,000 square feet.
Despite the rising vacancy rate, average rents rose year-on-year by 3.1 per cent to CAD 17.24 per square foot per annum. This was due to the growing availability of high-quality Class A office space and landlords protecting asking rents by offering greater incentives such as rent-free periods and flexible termination clauses.
It was reported in September 2021 that Devencore had been acquired by Avison Young.