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National Office Dashboard Q3 2017

National Office Dashboard Q3 2017

National Office Dashboard Q3 2017

  • Vacancy in all major suburban office markets was down year-on-year. Interestingly, both Calgary and Edmonton saw a moderate decline in suburban vacancy despite increases in downtown vacancy of 440 Bps and 30 Bps respectively for the year.
  • While the demand for suburban office product in markets such as Toronto and Vancouver can be partly attributed to historically-low downtown vacancy, the decreased vacancy across all markets nationally suggests a potential shift in occupiers' workplace strategies.
  • The performance of the major markets was mixed for downtown vacancy, with moderate increases in Toronto and Edmonton but decreases in Vancouver, Ottawa and Montreal. Calgary experienced a significant increase in vacancy YoY as uncertainty around oil and gas continued to impact tenant demand. 
  • Despite this mixed vacancy performance, rents in all Canadian downtown markets have declined. Of these, Calgary has seen a 25% decline in rents and now has the lowest downtown office rates in Canada (of the major markets). However, Calgary recorded positive net absorption this quarter, and while it is too early to suggest the market has "turned the corner" - it is certainly a positive sign. 
  • Suburban rental rates have also declined in all reporting markets except Toronto where there has been a 23% increase in suburban rates (Calgary's suburban asking rates were not available as of the date of publication.). 
  • GDP Growth forecast (CBOC) has moderated to the point that major markets in Canada are expected to perform within a band from 1.9% real growth to 2.7% real growth with Montreal and Toronto respectively, driving these low and high rates. 
  • Despite this positive growth outlook, the key question that remains a focus is, "How long will it be before Calgary and Edmonton office markets return to a balanced state, and what will have to happen to bring this about?" 
  • Vancouver's unemployment rate has declined to a point where immigration may be necessary to support further growth in the office sector. In other markets, there is greater unemployment that can support continued growth of office using industries at present.

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