-- Stagnated activity and departure of government agencies from the downtown core send landlords scrambling to retain tenants; suburban markets demonstrate resiliency with positive flow of lease activity --
Ottawa, July 4, 2013 – Ottawa’s office market, in particular its downtown core, experienced a very challenging second quarter with limited deal activity and rising vacancy rates, according to Colliers International’s Quarterly Office Market Report released today. The average vacancy rate for the Ottawa office market increased by 10 basis points to 8.7 per cent as of the end of June. This increase is mainly attributed to the very limited deal activity and departure of tenants from the downtown core, which caused vacancy rate in this key sub-market to jump by 40 basis points to 7.3 per cent. The “tenant market” conditions in the Central Business District also put a downward pressure on the average asking rent rate for A Class facilities, inching $1 lower to $26 per square foot.
“It seems that Ottawa’s office market is a tale of two different cities,” says Kelvin Holmes, Managing Director with Colliers International in Ottawa. “On the one side is the downtown core where, due to the current conditions, the expected new Class A inventory on 150 Elgin Street and limited pipeline of prospects, landlords are aggressively competing to retain current tenants. On the other side, the suburban markets, especially in Kanata and the Fringe/Byward market, were abuzz with lease activity over the past three months as a growing number of small and medium-sized companies from the high-tech industry catapulted on lease opportunities that offered attractive rent rates, a plethora of parking and amenities.”
In stark contrast to the downtown office market, vacancy rate in the suburbs decreased by 1.7 per cent during the second quarter of the year to 13.7 per cent, with the majority of space absorbed in B class buildings. Additional evidence to the resiliency of the suburban office market can be found in the average asking rent rates. In the Fringe, the average asking rent rate for A Class office went upwards by $1 to $22 per square foot while in Kanata, the average asking rent rate for B Class office increased by $0.50 to $11 per square foot.
Ottawa Vacancy Rate Current and Forecast
Casino - The City’s Future Economic Life Line?
A casino-to-be in the nation’s capital is still a hot topic, fueling public debate and attracting a lot of attention. Potential locations for the complex have been proposed by various stakeholders, ranging from the current OLG site at the Rideau Carleton Raceway to a place adjacent to the home of the Ottawa Senators at the Canadian Tire Centre, to name a few.
“Colliers’ point of view is that the appropriate site for the casino should take into account the overall potential contribution of the facility to the city’s business growth,” adds Holmes. “A casino complex should be viewed as a catalyst for a larger entertainment district that would inject energy to the city, and attract tourism and businesses. As such, a downtown location serves as an optimal venue. A casino in proximity to the Centre Business District will fill the void created by the departure of government agencies, will spur the development and occupation of city-centre condominium projects, and will repatriate and bring new dwellers to the inner-city by offering a live-work-play experience.”