Low vacancy in the office market is making growth difficult
Steve Randall
REP
Ottawa is in demand from businesses, especially those in the technology and e-commerce sectors; but it needs to ensure inventory can keep up.
That’s the warning from CBRE which says that the vacancy rates for offices and industrial real estate are being driven down and economic growth could be stifled without increased supply.
“In every sense, Ottawa is competitive on a global scale,” CBRE Ottawa Managing Director Shawn Hamilton told the Ottawa Market Outlook event last week. “The only thing we need now is room to grow, and it is incumbent on all of us to do what we can to help create more. If we do nothing, we risk stifling the growth we’ve worked so hard to achieve.”
In the past five years, the city’s population has grown by 99,000 and added 46,000 jobs. Offices have seen a total absorption of 2.1 million square feet in that time with 88% of it during the past 2 years. The office vacancy rate is 7.5%.
Meanwhile the industrial segment has seen absorption of 2 million square feet with a vacancy rate of just 2%.
“The reality is we are approaching the point where low vacancy in the office market is making growth difficult for tenants, whether they’re in the central business district or in the Kanata tech hub, where the rate of growth is higher than in the core. Larger opportunities (50,000 sq. ft.-plus) are scarce, with only smaller pockets of space sprinkled around the city,” added Hamilton.
What’s the solution?
Hamilton is calling on the federal government to take direct action – by moving out of some of the buildings it occupies.
This includes acceleration of the Department of National Defence’s exit from its downtown premises; and the movement of some of the government’s office space in the CBD to Orleans, closer to its employee base.
He also wants the municipal government in Ottawa to cut development charges to encourage more construction.
Hamilton has a message for landlords: “Build, and if you can’t build, be ready to build so you can shorten the development cycle. We need to be able to deliver space to service the city’s growth and reach our true potential, while limiting the distractions and setbacks that can result from growth.”
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