In a projection for office vacancy rates in four western cities, Cushman Wakefield sees inventory growing in two and tightening in the others.
Vancouver is has more than two million square feet of new office space under construction, but 60 per cent of it is already leased.
However, as tenants relocate into new towers, there will be a large displacement of space into the market, with vacancy expected to rise to 10.5 per cent by 2015. Rental rates will see some modest easing over the next two years.
Weak demand will continue to characterize Calgary's central office markets over 2014, though improved global economic conditions and positive outcomes that will strengthen Alberta's ability to ship oil should buoy demand into 2015. Calgary's premium class vacancy rate is projected to rise to 6.7 per cent by the end of 2014, and reach 7.3 per cent by the fourth quarter of 2015. Rental rates should decline modestly.
In Edmonton, vacancy rates will rise with the arrival of the new Kelly Ramsey building, the vacancy rate for premium space is expected to peak at 8.7 per cent in early 2014 and then fall to 6.3 per cent by the end of 2015. Rental rates are projected to remain flat throughout the 2014 to 2015 period.
Winnipeg’s Class A space will remain near historic lows even in the face of new development activity. With the addition of the office tower at 311 Portage Ave., vacancy will rise to a peak of 4 per cent. Modest demand for prime space will drive vacancy slowly downward until it reaches 3.7 per cent at the end of 2015. Rental rate pressure on premium space should rise modestly over 2014 and 2015.
