Positive stability in Edmonton’s office vacancy ‘a sign of things to come’: CBRE

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Edmonton’s office vacancy rate has remained stable in early 2022 as the national average has edged upwards, a trend that bodes well for the year ahead, according to a new CBRE report.

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The commercial real estate firm released its first-quarter report for 2022 last week, pegging Edmonton’s overall office vacancy rate at 21.3 per cent while the national average moved to 16.3 per cent — up compared with the end of 2021.

Downtown Edmonton offices have a vacancy of 21.1 per cent, slightly lower than suburban offices at 21.5 per cent, the report stated.

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“We’re continuing to see positive momentum across all markets,” CBRE Edmonton managing director Dave Young said.

“I think as this year progresses, the economy starts to open, that positive momentum will continue.”

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Edmonton’s commercial real-estate market was hit hard first by the oil-price crash, then the COVID-19 pandemic. Young said it’s encouraging to see stability again in the market, with office vacancy even dipping a little.

“I think it’s a sign of things to come,” he said. “I think a flat market over the last couple years, it’s a win.”

A return to the office is a key part of pushing vacancy rates down. Alberta’s work-from-home mandate came to an end on March 1 and some workers are already back in the office. Other employers are making plans to transition people from home workstations, though this could be disrupted by another wave of COVID.

As well, the way employers are leasing space is changing, with many increasingly using hybrid work models rather than expecting workers to come to the office five days a week.

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“Landlords are responding by incorporating hybrid concepts into suite designs to meet changing space utilization needs, a trend that is only expected to accelerate through the year,” the CBRE report says.

Young said a leading indicator for how the Edmonton region is performing is the industrial sector, where there’s currently plenty of activity.

According to CBRE, the city posted 1.9 million square feet of positive industrial absorption in the first quarter of the year. With nearly three-quarters of new space under construction already pre-leased, the firm says additional building will need to “ramp up dramatically.” Overall availability rates are down, sitting just below six per cent.

Young said more confidence in the region will help, and ideally office vacancy can drop a little further.

“The last couple of years in the office market has probably been the most challenging years in pretty much everybody’s career,” he said. “I don’t think anybody knew how to operate in a pandemic.”


Twitter: @meksmith

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