The Canadian office segment should brace itself for the combined impact of increased occupier demand and the flourishing of nascent industries if it is to remain competitive and relevant, according to Avison Young’s Mid-Year 2017 North America and Europe Office Market Report.
“Amid varying economic performances and property fundamentals, North American and European office leasing markets are generally performing well as they undergo an important shift in dynamics,” the commercial real estate solutions provider stated in the study. “Traditional drivers of demand are being joined by emerging disruptors that will increasingly shape the future of the office-space market and commercial real estate as a whole.”
The report deemed “urban intensification, transit-oriented development, consolidation, workplace design, and millennials’ live-work-play preferences” as the most important disruptive trends in Canada.
“Though demand from traditional sectors has been patchy, technology and the co-working craze are transforming the marketplace, garnering an increasing share of the leasing pie. Co-working space providers have expanded rapidly due to the need to cater to startups, entrepreneurs and the increasing demand for affordable workplaces on flexible lease terms,” according to Bill Argeropoulos, principal and practice leader of research (Canada) for Avison Young.
The Canadian office real estate sector is on a relatively stable footing at the moment, the study added.
“Canada recorded 12-month absorption of more than 3.7 msf (million square feet). Losses in some western markets, largely in Calgary and Edmonton and, to a lesser extent, in Winnipeg, were offset by gains in Toronto, Montreal and Vancouver.”
“Owing to robust positive absorption (led by Toronto and Montreal), suburban markets combined for a 13.6% vacancy rate at the midway point of 2017 – marginally lower than at the same mark in 2016. Apart from Winnipeg (4%), double-digit vacancy prevails across Canada's suburban markets,” the report explained. “However, vacancy declined in seven of 11 markets year-over-year, with five markets below the national suburban average.”
The Canadian section of the report covers pages 17 to 27 of the full document, which can be accessed here
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