Double-digit vacancy rate and decreasing asking rent rate create unique opportunities for tenants; silver lining can be found in the government’s plan to occupy new downtown space by 2017
Ottawa, July 15, 2014 – Ottawa’s office market continues to favour tenants as vacancy rates across most sub-markets kept climbing during the second quarter of the year, bringing the average office vacancy rate to the double-digit zone at 10.6 percent. According to the Colliers International Office Market Report released today, the Fringe Core was the only sub-market with a stable vacancy rate at 5.7 percent, mainly due to the movement of some high-tech companies to the area.
The plethora of available office space in all classes and the increase in inventory level (37.28 million square feet) also create a downward pressure on the asking lease rate, which tumbled compared to the same quarter last year. The average asking net rent in Ottawa during the second quarter of this year dropped to $15.25 per square feet down from $18 per square foot measured during the second quarter of last year.
“Colliers forecast has been calling for a tenant market with above 10 percent vacancy rate for quite some time and the expectation is for the trend to continue into 2015,” says Kelvin Holmes, managing director with Colliers International in Ottawa. “However, some silver lining can be found in the current market condition as it appears it might have reached the bottom of the cycle. Additionally, the government’s plan to occupy new office space in the downtown core by 2017 and increased interest from the high-tech sector in the Fringe Core area do provide some early signs of optimism.”
The Colliers Office Market Report, which provides a breakdown analysis across the city’s sub-markets, also identifies increased lease activity in the Kanata area, which is attributed to the release of additional space previously occupied by BlackBerry.
“While vacancy rate in Kanata went up, the release of office space to the market generated a lot of interest from potential tenants looking to take advantage of the current market,” adds Kelvin Holmes.
"There is a real sense of momentum in Ottawa's tech community," said Bruce Lazenby, President and CEO, Invest Ottawa. "Success attracts success. When an entrepreneur hears about a company like Shopify raising $100m or about Cisco growing 1800 jobs in Ontario (many - or most - in Ottawa), they recognize the opportunities for success that Ottawa provides. We are also successfully attracting foreign companies to establish new offices in Ottawa. Frankly, we see job growth pretty much across the board."
> Download full report.