Tenants’ hunger for Ottawa’s commercial properties has reached its strongest level in around a decade, according to a recent market analysis by Point2 Homes.
Citing data from the Ottawa Business Journal, Point2 Homes reported that approximately 200,000 square feet of the city’s office space for rent had leases for them during Q1 2019.
This activity pulled down Ottawa’s vacancy rate down to a 10-year low of 7.5%, representing a 0.5% quarter-over-quarter decline.
Higher-end office properties have proven even more attractive in these conditions, especially since the asset class has seen its rate per square foot drop by around 63 cents. Class-A vacancy in Ottawa’s downtown area fell from 5.7% in Q4 2018 to 4.7% during the succeeding quarter.
“This type of commercial real estate is the most desirable, and many companies will clearly pay the extra that it costs,” Point2 Homes explained.
“A crucial issue that creates the situation described here in the Ottawa office market is that, unlike in some other large Canadian cities, construction of commercial property is lacking. Given Ottawa’s growing economy, it can be predicted that the vacancy rate will drop some more in the future.”
Moreover, it’s not just the core that is benefiting from the increased traffic. In fact, office vacancies in the suburban areas shrunk by 1.2% to end up at 7.3%, which might spur increased development in the outskirts.
“It seems that businesses are currently seeing the advantages of operating from cheaper, less central premises,” Point2 Homes stated. “Maybe the calls for increased office construction will be heeded, and perhaps some rezoning enacted, and then Ottawa will be made ready for continued business success.”