Commercial real estate vacancy rates rise in first quarter; survey shows

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TORONTO - The recession and credit crunch combined led to a rise in commercial real estate vacancy rates across the country in the first quarter of 2009, especially in Western Canada, a report from property firm CB Richard Ellis Ltd. shows.
The report released Thursday said vacancy rates in both downtown and suburban markets across Canada rose to 7.5 per cent in the first quarter of 2009, up from 6.3 per cent the year before.
''The residual effects of the Canadian economic downturn continued to impact first quarter commercial real estate market conditions,'' John O'Bryan, vice-chairman of CB Richard Ellis stated.
''In almost all cases, vacancies remained broadly based - a trend we expect to continue for the balance of 2009 - while more news regarding the slowing Canadian economy continues to surface.''
The report said an additional 4.65 million square feet of commercial space came on the market across Canada in the first quarter of 2009.
That is a ''net absorption'' from 2.6 million square feet to negative two million year-over-year ''aided by increased commercial inventory and rising unemployment,'' the report said.
Sublet space in the quarter increased to 6.3 million from 3.8 million square feet ''as more companies nationwide have begun reconsidering their need for underutilized office space.''
Calgary showed the biggest year-over-year hike in the quarter with a vacancy rate of 8.1 per cent, or nearly double from 4.3 per cent for the same quarter last year.
Sliding energy prices have meant less demand for office space in the oil company capital, the report said.
''Capital investment in the province's energy sector has been scaled back, while Alberta's first provincial deficit in years contributed to business uncertainty in the first quarter,'' the report said.
Vacancy rates in Vancouver rose to 7.3 per cent from six per cent year-over-year as investment capital leading up to the 2010 Olympic Games began to wind down.
''Many companies in the Vancouver area have been forced to re-evaluate their need for existing and/or augmented office space,'' the report said.
In Toronto, total overall vacancy rates rose to 7.7 per cent from 6.8 per cent ''moderated slightly by limited new construction in the city's suburban market.''
In Ottawa, where the government continues to dominate office space, the report said the vacancy rates rose slight to 5.1 per cent from 4.9 per cent.
Montreal vacancy rates remained the highest at 8.8 per cent, up from 7.9 per cent last year.
CB Richard Ellis is a property consulting and research firm based in Toronto.

Organizations: Richard Ellis

Geographic location: TORONTO, Western Canada, Vancouver Calgary Alberta Ottawa Montreal

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