A tale of two cities; office markets in Calgary, Ottawa

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Two reports this week show the different states of commercial real estate markets in Calgary and Ottawa. Office vacancy rates in Calgary increased from 6.3 per cent in the first quarter of 2014 to 8.5 per cent in the same period this year while leasing activity fell by 2 per cent according to a report from Cushman & Wakefield. Its outlook for the year is for negative absorption to continue this year with net rates dropping in the CBD and a lesser impact in the suburbs. On building intentions the reports says: “In this economy it is unlikely any developer will commence construction on firmly proposed projects, due to difficulty in finding anchor tenants.” It expects that once oil prices strengthen there will be an uptick in activity.

Meanwhile in Ottawa the vacancy rate currently stands at 11.2 per cent, down from 11.3 per cent a year ago; in the downtown area it is 10 per cent, down from 10.2 a year ago. The latest market report from Colliers International suggests that now is a good time for tenants to relocate to/within Ottawa as “the current low net effective leasing rates will likely shrink over the next 12-24 months, as the market continues to recover and vacancies drop.” Class A space is most in demand in the Ottawa area.

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