Leasing Opportunities Remain Solid for Office and Industrial Tenants
Through the latter half of 2008 and the first six months of 2009, the global financial crisis made its effects felt on the corporate and industrial real estate markets across Canada. While it is true that the country wasn't as hard hit as the U.S., a number of cities saw significant upheaval in their local markets. In downtown Vancouver, for example, the amount of available office space nearly tripled over the twelve-month period, and in the Metro Vancouver region vacancy rates in quality industrial space jumped from under 3% to just over 4%. In Calgary, office vacancy rates doubled from 3.5% to 7.0% over the first six months of 2009-and it should be remembered that in early 2008 vacancy rates were virtually nil. Toronto also saw its markets shift considerably during the recessionary period, with Class "A" and Class "B" office vacancy rates in the Downtown District and Financial Core rising from 4.2% to 6.3%. In Kanata, just outside Ottawa, high-tech and start-up companies have been very hard hit by the financial squeeze and overall vacancy rates have soared to over 19%.
- Corporate real estate market holds relatively steady in 2009 as tenants and landlords wait out recession
- Overall vacancy rates in office and industrial properties show moderate increase
- Many tenants taking opportunity to review real estate strategies
Industrial Market Highlights
The Centre West region saw overall industrial vacancy rates rise into the 8%-10% range, largely because of tenants freeing up larger blocks of space. This region of the city is home to a number of high-tech and biotech industries, which have been hurt by the credit crunch. At the end of 2009, asking rental rates were generally in the $4.50-$5.50 per square foot range. This region has a significant inventory of buildings with ceiling heights of more than 24 feet, but the vacancy rates in these properties is generally quite low, at approximately 4%.
NKF Devencore Office and Industrial Market Study- Spotlight on Suburban Montréal, Winter 2010