Edmonton offices seeing higher vacancy rates as more supply coming online
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Office space in Edmonton is growing at a breakneck pace, with almost 100,000 square feet more available now than at the start of the year and a vacancy rate that has already eclipsed 11 per cent.
Leasing agents Colliers International released a report to Metro that shows — counting the space that’s been leased against new space on the market — 97,763 more square feet available in the Edmonton region this year, including an additional 8,466 square feet in the downtown core.
But what has some predicting a “bloodbath” in office property is what’s coming: projects like the Kelly Ramsey building, the City of Edmonton office tower and the Stantec Tower, all set to open in the years ahead.
Those new projects will add about 1.7-million square feet of office space to Edmonton over the next three or four years as the projects open up.
By comparison, Toronto added 1.6-million square feet of office space in 2014, when its office vacancy rate was hovering around 5 per cent.
Regardless, Mayor Don Iveson said the increasing space is not a major concern.
“It’s natural fluctuations in the market. What we’re seeing is that when vacancies do go up landlords are actually investing in their properties,” he said.
Colliers vice president Ian Bradley said landlords will be forced to improve their properties if they want to attract tenants.
Bradley is the leasing agent for 9888 Jasper, a renovated property that's re-opening on Jasper and 99 Street. He said that building has leased most of its new space, but only after extensive upgrades that gave the building a LEED gold certification.
“That is a signal to any perspective tenant that you have a progressive landlord that is spending money on new buildings,” he said.
Bradley predicted that office landlords are going to face hard times if they don’t invest in improvements.
“Their vacancies haven’t totally materialized yet, but they’re coming and it’s going to be a bit of a bloodbath,” he said.
He said the new building proposed for the downtown will open a lot of space and the market will take time to fill it.
“That is 1.7 million square feet of new supply and in a good year we have positive absorption of 200,00 square feet.”