Ottawa, November 6, 2015 – Commercial real estate in Ottawa told two different stories in the third quarter, according to Colliers International Q3 2015 market report for the region. While commercial industrial market vacancies remained low, commercial office market vacancies increased, leading to aggressive deals from a number of landlords in order to minimize the impact of large-scale tenants leaving their buildings.
Senior Sales Representative
“The Ottawa office market remains a tenant market because of current vacancy levels,” said Warren Wilkinson, Colliers International’s Senior Sales Representative in Ottawa. “As a result, tenants remain in a good position to improve the terms of their leases, or rent office space of high quality at preferential rates.”
COLLIERS OTTAWA OFFICE REPORT
Commercial office vacancy across Ottawa increased to 11.9 per cent as of the end of the third quarter, a drop of 0.5 per cent from the second quarter. The downtown office submarket, which comprises 42 per cent of all office space in the city and the Kanata submarket continue to be the most sought-after regions for prime office space.
The Colliers report showed that although tenants are currently in a positive negotiating position, the projected market recovery in the next 12-24 months may end the current attractive landlord offers available.
“As with any national capital, the activities of the federal government and its various departments continue to have the biggest impact on office space in the marketplace. Any real estate shifting within the federal government can have a domino effect throughout the market. The federal government’s downsizing and relocations strategy is still affecting the market. When the Department of National Defense leaves the downtown core, the repercussions could be substantial,” said Wilkinson.
COLLIERS OTTAWA INDUSTRIAL REPORT
The commercial industrial market in Ottawa is one of continued strength. Industrial vacancy rate in Ottawa remained low in the third quarter, though it slightly increased to stand at 3.9 per cent. This low vacancy remains even as the velocity of deals and market activity remains steady quarter over quarter, and increasing slightly over the past three months.
“Change in the industrial market is unlikely to come rapidly as there is no new inventory being added to the market,” said Wilkinson. “Buildings that are available receive steady activity and interest in well-located, good quality industrial space has started to increase, and interest in industrial buildings remains high.”
This Colliers market report showed the Ottawa suburban industrial markets enjoyed positive absorption in the third quarter, with vacancy rates at their lowest in 39 months. There is some potential for further growth in this sector resulting from major capital projects currently underway and funded by the City of Ottawa and provincial government.
“The majority of tenant demand in the Ottawa industrial market is coming from the 2,000 to 10,000 square foot occupier segment,” added Wilkinson. “Tenants within that size range are typically looking for industrial space with existing improvements in order to reduce their day-one occupancy costs.”
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