The Winnipeg office market vacancy rate slightly increased by 20bps from the 1st Quarter to 14.1% in Q2. A key driver of the negative absorption came from the Downtown Class A segment which can be attributed to a single tenant, Wawanesa, who vacated their 200 Graham office space. As the new Wawanesa 334,725-square-foot office building nears completion, the relocation and consolidation of space will result in a significant shift in the office market supply as more inventory will come on the market, pushing the vacancy rate upwards. With that said, Winnipeg’s office vacancy rate is relatively lower in comparison to Montreal, Regina, Calgary, and Edmonton and hovers around the national average. With increased supply on the horizon, sublet vacancy remains relatively low, reinforcing at this time that tenants are still committed to their leases.
- As the flight to quality continues, we have seen some landlords adjusting to the current market circumstances by revitalizing and reinvesting back into their office buildings through renovation. Joining this trend is the revitalized lobby at 240 Graham. As office market dynamics are shifting, a diverse roster of amenities has become an essential component when attraction and retention strategies.
- Despite having beautiful heritage buildings, the Winnipeg office market remains highly underdeveloped with functionally obsolete assets and a lack of more contemporary options, as the market fundamentals don’t justify the cost to repair the former. Furthermore, having Downtown office conversions and demolition incentive program like other cities such as Calgary would be beneficial to the Downtown core. Such programs support both the demolition of end-of-life office buildings that are unsuitable for office conversions, as well as office space conversions to residential units, hotels, schools, and/or performing arts centers.