The Thompson Okanagan's growing technology sector has continued to be one of the main drivers of absorption for the region's new supply over the last three years, resulting in only marginal changes in the vacancy rates in both Kelowna and Vernon. As a result, net rent ranges have also remained relatively unchanged, however the increase in new class 'A' office supply in Kelowna has driven the average lease rate up for the city.
- For the first time in three years, the Kelowna office vacancy rate increased slightly reaching 9.11% in Q4 2017 from 8.78% in Q2 2017. This increase is at least partially attributed to the consolidation of tenants into new office buildings like the Innovation Centre in downtown Kelowna.
- In Kelowna, higher tenant demand for class 'A' office space continues to drive new development throughout the city. We expect to see at least 153,000 square feet of new inventory added to the market over the next two years.
- The Vernon office vacancy rate has remained relatively stable over the past six months, reflecting minimal leasing or development activity in the market. A few small lease deals helped drop the amount of vacant space by 1,800 square feet, but otherwise activity in Vernon's office market is starting to plateau.
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