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Vacancy rose in office markets across Canada in the third quarter as companies adjusted to the impact of COVID-19 in addition to changing employee preferences.
But there was one notable area of strength: Mid-sized cities.
Bucking the big city trend
While Canada’s traditional office powerhouses, Toronto and Vancouver, saw vacancies inch up in Q3, Edmonton’s downtown office vacancy dropped to 19% from 19.7% a quarter earlier, according to CBRE’s new Q3 2020 Stats Report. The amount of sublet space in downtown Edmonton dropped by 8.3% in the third quarter, also bucking a pronounced national trend.
On the East Coast, Halifax’s overall office vacancy rate dropped to 15.4% from 16.1% in Q2. Like Edmonton, Halifax had its total sublease space decrease, by 24%. In a particular show of strength, office sublease listings represent just 3.1% of all vacant office space in Halifax.
London, Ontario’s office market also had a solid performance in Q3, with downtown vacancy dropping to 17.8% and sublet space decreasing to 74,000 sq. ft. The office market benefitted from leasing activity in downtown London, particularly in Class A and C buildings.
Waterloo Region’s office market stood out in Q3 for the fact that there was no office space available for sublease in its downtown market. Since the start of 2020, the office market has had 299,000 sq. ft. of net leasing activity, and new towers continue to be leased as they’re delivered.
Mid-sized cities are also holding their own on the industrial front.
Edmonton recorded 1.8 million sq. ft. of net leasing activity in Q3 2020 which pushed the industrial availability rate down to 8.6%. The majority of this demand came from the completion of two properties, including Amazon’s 1.0 million sq. ft. distribution facility.
In Halifax, the start of construction on Leon’s 150,000 sq. ft. warehouse brought that market’s development pipeline to 208,600 sq. ft., the first time that there is more than 200,000 sq. ft. under construction since 2012.
London’s industrial market showcased its resilience in Q3, as the amount of available space fell 40 bps quarter over quarter to 1.8%. Five new industrial buildings have been completed so far in 2020, and a further 738,000 sq. ft. is under construction.
And in Waterloo Region, developers continue to remain confident in the industrial market, as evidenced by HOOPP’s iPort Cambridge project, a 4.0 million sq. ft. multi-phase industrial distribution business park development, which is targeting a 2022 completion.