The Canadian office market saw overall occupancy grow by an annualized 2.3 per cent in the third quarter, and vacancy rates continued to fall in most of the country’s six largest cities, according to a new Colliers International report.
The report looked at office activity in Toronto, Montreal, Vancouver, Calgary, Edmonton and Ottawa, where there was more than 2.8 million square feet of occupancy growth during the quarter. The square footage of premises under construction has risen by 32 per cent to just more than 14.6 million.
Greater Vancouver recorded positive absorption for the sixth straight quarter, and vacancy rates continued to drop, particularly in the downtown core.
“Downtown activity is primarily pre-leasing in new supply at the moment because there’s a lack of available space,” said Hennigar. “The suburban markets, particularly business parks near SkyTrain stations, are seeing a boost because they have large blocks of contiguous space that the downtown market doesn’t.”
Of the new downtown supply, 30 per cent (1.16 million square feet) has been pre‐leased and a further 14 per cent (558,000 square feet) has optional deals. Amazon is responsible for 14.8 per cent of the pre‐leased space, with 563,000 square feet.
With the demolition of 1133 Melville underway to make room for Oxford Properties Group and Canada Pension Plan Investment Board’s The Stack, the amount of new supply under construction in downtown Vancouver jumped from 1.7 million to 2.3 million square feet from Q2 to Q3.
Telus Garden was sold for an undisclosed price in August (reportedly to Greystone Managed Investments Inc., according to Western Investor), but Telus reportedly expects to net $170 million from the sale.
Crestpoint Real Estate Investments Ltd. purchased 800 Burrard Street for $225 million ($1,000 per square foot), with a 4.25 per cent capitalization rate, from Oxford. Crestpoint cited Vancouver’s limited land supply and its ability to attract foreign capital as the basis for paying the premium price.