Edmonton’s swift growth in terms of employment is drawing in more companies and stimulating robust commercial leasing activity, according to a new market report by Marcus & Millichap.
With the city well on its way to recovery from the worst effects of Alberta’s oil industry crash, the “resurgence of the downtown through the ICE District and expansion of Edmonton’s LRT is attracting more employers to the urban core,” the report noted.
Overall positive prospects boosted asking rents by 1.6%. “After falling 1.2% in 2018, rent growth returns to a positive trajectory, increasing the average asking rate to 30.46 per square foot.”
The increased employment volume will come amid the construction of around 1.2 million square feet of office space being finished by the end of 2019.
“The completion of the 800,000-squarefoot Stantec Tower this year pushes deliveries well above the nearly 490,000 square feet added to Edmonton in 2018,” Marcus & Millichap noted. “Pre-leasing has been exceptional at new builds, leaving less than 5% of the pipeline available for lease, creating challenges for expanding firms.”
“New and modern office space with the amenities employees desire is in high demand, though as tenants move to updated offices, older and less desirable space is left vacant. This trend has held back rent growth recently as owners are finding they need to cut rates at outdated stock, even though the market vacancy rate nears pre-recession levels.”
And very little of this phased-out space will be wasted, as Edmonton presents invaluable conversion opportunities.
“Strong demand for multifamily and hospitality have provided an opportune use for inefficient and obsolete offices. Renovations and increased amenity packages at other properties can bring older office inventory back in favour with expanding firms.”