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Winnipeg Free Press - PRINT EDITION
Canada's office market surging
OTTAWA -- Canada's office market is undergoing a "remarkable" surge that points to gains in corporate hiring and the successful transition to a business-led recovery from one driven by the consumer housing market, says a report from Scotia Economics.
Rising leasing demand has pushed the national office vacancy rate to just 6.9 per cent in the first quarter from 7.3 per cent in the prior quarter and a cyclical high of 7.5 per cent in mid 2010, says economist Adrienne Warren, the report's author.
Vacancy rates are now moving lower in most of Canada's major centres, while at the same time rental prices are either stabilizing or moving higher, Warren writes.
"The turnaround is even more remarkable in light of the substantial new supply of available space. A boom in office construction added roughly 10 million square feet on new central inventory in 2009 and 2010, the largest share concentrated in Toronto and Calgary. Yet this new space has essentially already been absorbed," Warren said.
Rising demand for office space reflects the resilience in hiring of office-based professionals like lawyers, accountants, engineers, consultants and software developers, she said.
Yet considering that commercial real estate activity tends to lag economic recoveries, the performance of Canada's market is all the more notable, Warren said.
"Canadian firms are confident adding to their payrolls and real-estate obligations, given strong corporate balance sheets and historically low borrowing costs," she said.
-- Postmedia News
Republished from the Winnipeg Free Press print edition June 13, 2011 B6
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