Office-leasing market shows signs of recovery
Garry Marr, with a file from Derrick Penner
Sun
Metro Vancouver’s office-leasing market saw some signs of economic recovery in the fourth quarter of 2009, along with signs of concern over how sustainable that recovery will be.
Commercial realtor CB Richard Ellis said in its fourth-quarter report that downtown Vancouver’s vacancy rate edged down to 5.8 per cent as leasing activity picked up for the second straight quarter.
Across Metro Vancouver, however, office vacancy edged up to 9.1 per cent from 8.9 per cent in the previous three months.
“Deal activity downtown was very strong this quarter,” CB Richard Ellis analyst Nicholas Westlake said, with tenants perhaps staging a “flight to quality” to snap up premium Class-A office space.
Across Metro Vancouver, however, new suburban office developments continue to add space into a market with already weak demand.
Burnaby, for instance, had a 12.7-percent vacancy rate in the fourth quarter, and is expected to see that number rise further through 2010 with the completion of two new developments.
“With the Canadian unemployment rate hovering around 8.5 per cent, it is quite evident that companies will need to start creating more jobs if we are to witness any sort of a positive trend moving into 2010,” Westlake said.
Nationally, the overall vacancy rate shot up from 6.7 per cent a year ago to 9.8 per cent this past quarter.
CB Richard Ellis maintained that businesses have already began taking on new space, but most of those decisions won’t be reflected in statistics because the leases don’t begin until the new year. “While the general commercial real estate outlook for 2010 is mixed, confidence in the Canadian economy and its impact on the sector’s recovery cannot be underestimated,” said the company’s vice-chairman John O’Bryan. “As we head into 2010, anticipated economic stability will gradually allow the country’s commercial real estate market to improve.”
Toronto and Calgary, which make up half of the country’s commercial real estate market, continue to have a great deal of new supply coming onto the market. CB Richard Ellis says it might take until 2011 for both markets to absorb the supply of new space.
“Watching the story in Toronto and Calgary is akin to watching a glacier head steadily in your direction,” O’Bryan said.
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