Corporate real estate advisor and brokerage Newmark Knight Frank Devencore recently released a Real Estate Market Study, noting that office vacancy rates in the downtown areas of many major Canadian cities have increased, year-over-year. Over the last 12 months, Class “A” and “B” office vacancy rates have increased, Canada-wide, from 4.9 per cent to six per cent.
The brokerage also reported a significant increase in vacancy rates in downtown Montreal’s Class “A” and “B” office buildings. In the last six months, the region witnessed a 1.2 per cent jump in vacancy rates with figures growing from 6.8 per cent to eight per cent. Office availability also rose over the last half of the year to over 12 per cent.
“A number of factors account for this increase in availability,” says Jean Laurin, President and CEO of Newmark Knight Frank Devencore, of downtown Montreal’s office market. “New buildings have been, or are about to be, delivered to the market. As a result, the total available office inventory has grown by approximately 400,000 square feet. Additionally, a number of industrial properties have been redeveloped and are now offering office space, which is a trend we have been watching take shape for a few years.”
Additional influences on rising vacancy rates and availability include:
- Repurposed office spaces offering businesses and tenants less expensive rents;
- An increase in inventory of redeveloped properties located outside the city’s downtown core; and
- Recent relocations announced by major downtown tenants.
Across Canada, approximately 2 million square feet of rental space was added to the office market in the last year.