‘Organic growth’: downtown office vacancy rates continue to decline

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This article was published 27/03/2025 (227 days ago), so information in it may no longer be current.

With first-quarter Winnipeg office vacancy data being finalized, something unusual appears to be happening in the city: downtown office vacancy rates are coming down.

National real estate firm Colliers will come out with its early 2025 results soon, but a local company official said the expected number is 15.4 per cent by the end of the first quarter, compared to 16.8 per cent in the fourth quarter of 2024 (which was a very slight decline from the third quarter last year).

Sean Kliewer, senior vice-president with Colliers in Winnipeg, said economists had predicted such vacancies would not stop rising until next year.

“Nothing has fallen off the cliff (in Winnipeg), as people might have predicted,” Kliewer said. “The experts sometime get it wrong and sometimes it’s to the benefit of everyone. It appears we have peaked from a vacancy perspective already, early, which is a good thing.”

Kliewer noted there’s really no longer much expectation out-of-town companies will come in and lease up downtown office space.

“The biggest reason the vacancy rate is declining is organic growth,” he said. “Local companies are expanding. This is still a market without a ton of new entrants.”

The 17-storey, 365,000-square-foot office tower at True North Square (the city’s first multi-tenant office tower in 30 years) was completed in 2018. It was followed by the 360,000-sq.-ft. Wawanesa head office in 2023.

However, according to Colliers, there is no new supply of office space on the market and no new construction.

“It will be some time before we see another major tower unless it’s a head office scenario (like the Wawanesa situation),” Kliewer said.

But clearly the market has not collapsed. There is still demand, from an investment perspective, for downtown Winnipeg office buildings in what has always been a stable, reliable market.

David Chartrand, president of the Manitoba Métis Federation, is a case in point.

Since 2019, the MMF has purchased seven downtown buildings, including one of the Portage and Main towers.

He said the MMF’s downtown portfolio has a 22 per cent vacancy, but that number is elevated because of the 68 per cent vacancy at the 170,000-sq.-ft. 333 Main St., purchased last year.

That building has been almost entirely vacated by Bell MTS. The telco now occupies the whole of 191 Pioneer Ave., another building MMF acquired last year.

(Chartrand is, however, concerned about future occupancy, as the Bell MTS lease at 191 Pioneer is up in 2026. A Bell MTS spokesperson has said the company has no current plans to change locations.)

Meantime, Chartrand said the MMF properties’ vacancy rate will be down to 15 per cent by the end of the year.

“We’re going to be announcing two net new tenants — new to Winnipeg — shortly,” he said. “I am pushing vigorously for downtown revitalization. We’ve spent $100 million.”

The buildings the MMF owns also now house office space for about 600 of its employees.

“If we can get the downtown booming, you would be able to alleviate all the other stresses,” Chartrand said, referring to crime and safety concerns — often cited as a reason people might be prone to set up offices elsewhere.

Kliewer noted downtown development is still strong, with projects taking place including a residential tower at Donald Street and St. Mary Avenue, another on Colony Street, as well as the residential/institutional redevelopment about to happen at the former Portage Place mall and former Bay flagship store.

Downtown safety is something the city still needs to get a handle on, he added.

martin.cash@freepress.mb.ca