With new developments pending, downtown vacancy rates set to rise
OTTAWA, ONTARIO--(Marketwired - Dec. 5, 2013) - In its Real Estate Market Study published today, Newmark Knight Frank Devencore reported that combined Class "A," Class "B" and Class "C" vacancy rates in the greater downtown Ottawa market, including Centretown, the downtown core and the Byward Market, are currently running in the 4.7% range, with just over 900,000 square feet vacant. The downtown Class "A" and "B" availability rate - which includes space soon to be vacated but currently occupied - stands near the 7% mark.
In addition, two major office developments underway in downtown Ottawa, combined with sluggish economic conditions and office space demand, will in all likelihood contribute to a significant increase in Class "A" vacancy rates over the next 12-18 months. Morguard's Performance Court at 150 Elgin is nearing completion, with the initial delivery of space scheduled for January 2014. In addition, the Lorne Building redevelopment at 90 Elgin Street, which is being carried out by Public Works and Government Services Canada, is well underway. These buildings will augment the existing downtown office space inventory by almost 1 million square feet. If this inventory were on the market today, overall vacancy rates in the downtown core would rise to over 9%.
In the Kanata and west-end submarket, where the combined Class "A" and Class "B" vacancy rate currently stands at 13.4%, acquisition and consolidation events continue to exert a significant impact. A case in point is Blackberry, which completed a new building within the past year and is now shedding space at some of its other locations. The future of the former Nortel Networks campus has also been the subject of speculation. The Department of National Defence (DND) has been slated to consolidate at this 2.3 million square foot campus, but the advisability of that move is now reportedly being re-examined in light of the discovery of electronic bugging devices and the cost overruns that their removal may cause.
As has been the case for the past year, NKF Devencore in Ottawa is continuing to advise its larger clients that there may be advantages in negotiating blend & extend transactions with their landlords, with whom they may enjoy somewhat more negotiating leverage than they have over the past few years.
In the rest of the Canada, combined Class "A" and Class "B" vacancy rates spaces have climbed only slightly through 2013, from 4.5% to 4.9%, reflecting a relatively flat economy. At the same time, it should be noted that the country's total inventory of built office space has increased considerably over the past two years, from approximately 207.7 million square feet in mid-2011 to 210.9 million square feet today.
About Newmark Knight Frank Devencore
As part of Newmark Grubb Knight Frank, one of the world's leading commercial real estate advisory firms, Newmark Knight Frank Devencore is Canada's largest corporate real estate advisor and brokerage, exclusively representing corporate, industrial and retail space users. With offices across the country, Newmark Knight Frank Devencore offers its global clientele comprehensive services that are individually designed to ensure executive real estate decisions are supported by effective strategies and professional execution. To learn more about our capabilities, please visit www.devencorenkf.com.
About Newmark Grubb Knight Frank
Newmark Grubb Knight Frank (NGKF) is one of the world's leading commercial real estate advisory firms. Together with its affiliates and London-based partner Knight Frank, NGKF employs more than 12,000 professionals, operating from more than 320 offices in established and emerging property markets on five continents.
With roots dating back to 1929, NGKF's strong foundation makes it one of the most trusted names in commercial real estate. Its integrated services platform includes leasing advisory, global corporate services, investment sales and capital markets, consulting, program and project management, property and facilities management, and valuation services. A major force in the real estate marketplace, NGKF serves the local and global property requirements of tenants, landlords, investors and developers worldwide. For further information, visit www.ngkf.com.
NGKF is a part of BGC Partners, Inc. (NASDAQ:BGCP), a leading global brokerage company primarily servicing the wholesale financial and real estate markets. For further information, visit www.bgcpartners.com.