Ottawa, ON, April 14, 2015, – The Colliers International Q1-2015 Report for the National Capital Region, shows Ottawa’s industrial markets in relatively healthy shape, with robust current and future leasing demands. The office market is beginning to show some signs of recovery, illustrated by a decrease in vacancies in a number of prominent Class A buildings.
COLLIERS OTTAWA OFFICE REPORT
The Colliers International Report surveyed 462 buildings in Ottawa with a total office inventory of more than 37 million square feet. The overall Ottawa market vacancy rate decreased from 11.3 per cent in Q4-2014 to 11.2 per cent in Q1-2015, which was driven by the decrease in Ottawa’s downtown vacancy rate to under 10 per cent in Q1-2015 from Q4-2014 (previously 10.2 per cent).
Kelvin Holmes, Colliers’ Managing Director, Ottawa Brokerage, said, “The Ottawa office market continued to be tenant driven in Q1-2015 with tenants taking advantage of low rental rates and high incentives offered by landlords. We believe that now is a good time for tenants to relocate because the current low net effective leasing rates will likely shrink over the next 12-24 months, as the market continues to recover and vacancies drop.”
A major influencer in the Ottawa downtown market will be Public Works and Government Services Canada’s announcement of the result of its tender for 130,000 square feet of Class A space. “Such a large block of space will impact the market in a variety of ways with an announcement expected in Q2-15,” added Holmes.
The Kanata office submarket continues to witness a decrease in vacancy because of renewals and expansions alongside high deal velocity. Despite the downtown market allure, tenants in Kanata are continuing to renew and expand, demonstrating this market will likely remain stable, and enjoy high demand through 2015.
COLLIERS OTTAWA INDUSTRIAL REPORT
In Q1-2015, “Ottawa’s Industrial Market has demonstrated a continued, gradual increase in rental rates, the result of a steady demand for good quality and well-located industrial space,” said Holmes.
The Colliers International Report surveyed a total of 1,480 industrial buildings in the Ottawa market and showed a slight increase in inventory to 44.3 million square feet because of the addition of two new buildings in the East submarket. Vacancy rates dropped from 5.3 per cent in Q4-2014 to 4.8 per cent in Q1-2015.
At present, there is limited new industrial development planned throughout Ottawa and until a new supply of appropriately priced and located industrial land is available, the Industrial Market will continue its slow but steady pace.
The Colliers International Report identified a trend in the Industrial Market with a rise of alternative non-traditional users who are leasing industrial space, but using it for alternative purposes. This provides positive absorption through organic growth, thus adding pressure to a high-demand market.
“Those seeking Industrial Market space continue to search for good quality assets with access to major transportation routes,” he added. “The most highly sought-after spaces are those with a variety of loading options, access to major traffic routes and the ability to park trucks and service vehicles, and we expect this trend to continue throughout 2015.”
A lack of supply of well-located ‘cross-dock’ facilities continues to plague the industrial market and will likely continue, as there is a significant lack of land available for this type of product. ‘Cross-Docking’ is a procedure to speed up delivery of product with minimal storage time, inbound from a manufacturer to outgoing trucks destined to the consumer. Inbound and outbound trucks share both sides of a loading dock and goods are transferred directly from one truck to the other across the dock.
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