Economic diversity, stability keeps Winnipeg office market secure

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This article was published 31/03/2025 (210 days ago), so information in it may no longer be current.

It’s so hard not to think the world is crashing down, when so many of the norms we associate with a properly functioning economy seem to be called into doubt.

Without becoming recklessly complacent, in Winnipeg, we get to wrap ourselves in the warm blanket of stability that our economic diversity has woven while a U.S. president seems intent on breaking the order we’ve all relied on.

Case in point: the recent national data from both Colliers and CBRE that show the office real estate market in Winnipeg continues to be … stable.

While Winnipeg does not have the lowest vacancy rates downtown among Canadian cities, at 18.2 per cent, the rate decreased in the first quarter more than any of its peers.

The national average vacancy rates for downtown office space decreased for the first time since the first quarter of 2020, when the global COVID-19 pandemic was declared, according to CBRE.

Its data show while Winnipeg does not have the lowest vacancy rates downtown among Canadian cities, at 18.2 per cent, the rate decreased in the first quarter more than any of its peers.

The entity that absorbed the most local space — the Manitoba Métis Federation — is another example of the diversity of the economy and economic players involved.

While it’s true the net square free of rentable area in downtown Winnipeg is only slightly more than 25 per cent of Calgary’s inventory, but greater than London, Ont., and Waterloo, Ont., combined, its vacancy rate is at least 10 percentage points better than all three.

No one yet knows which economic levers are going to be pulled by U.S. President Donald Trump or how they will actually affect the Canadian economy, but Paul Kornelson, vice-president and managing partner with CBRE in Winnipeg, said there is a reference point.

“When the economy was going through a tumultuous time in 2008-09, Winnipeg performed really well compared to most of other markets in North America,” he said.

Kornelson and others believe that because of the relative size and diverse makeup of the market — and reluctance of developers to over-build — Winnipeg is well-positioned to handle adversity.

“When the economy was going through a tumultuous time in 2008-09, Winnipeg performed really well compared to most of other markets in North America.”– Paul Kornelson, vice-president and managing partner with CBRE

Sean Kliewer, senior vice-president for Colliers in Winnipeg, whose firm recently came up with similar metrics about the relative stability of the local office market, said one of the biggest reasons for that stability is it is driven by organic growth, rather than a hope (and prayer) some out-of-town company will set up a head office in the city.

Kornelson also notes another somewhat distinctive feature about this market: “A lot of our key stakeholders in the city are invested in it personally.”

In addition to its eponymous office tower — and plenty of other downtown real estate — James Richardson & Sons, Ltd. reacquired the Fairmont Hotel last year.

When Wawanesa Insurance completed its new head office tower and vacated space in a few others, it was another local player, the MMF, that acquired some of those buildings.

As well, the MMF repopulated another building it acquired, 333 Main St., with a few floors of its own employees to make up for the gradually shrinking office footprint of Bell MTS.

The MMF has invested about $100 million in the last few years, acquiring downtown real estate. That doesn’t necessarily lower the vacancy rate, but it does bolster the market.

“I am the one pushing vigorously for downtown revitalization.”– David Chartrand, president of the MMF

David Chartrand, president of the MMF, said he had a conversation with Mayor Scott Gillingham after the recent state of the city address when the mayor did not reference the MMF as a player showing commitment to the downtown.

“I am the one pushing vigorously for downtown revitalization,” Chartrand said, adding there are other announcements on the horizon.

It may not be related to macro economic trends, but Kornelson characterizes some of the dynamics in Winnipeg as a “flight to connectivity,” as in connected to the skywalk system which is leaving some of the class B office space on Broadway, for instance, with higher vacancy rates.

He noted it’s industrial real estate development that will more likely be affected by the finalized U.S. tariff regime.

On the office front, Kornelson said the tariff concerns are manifesting themselves in a greater desire in the market to acquire office space that does not require a total rebuild, where construction products might be tariffed and become much more expensive.

In a city with a reputation for being cost-conscious, that’s likely not going to be the biggest sacrifice, though it will be a shift from 10 years ago, when a new tenant would regularly tear down the old space and create a whole new look.

martin.cash@freepress.mb.ca