Edmonton Commercial Real Estate Outlook 2023
February 27, 2023 3 Minute Read
It was a challenging end to 2022 for Edmonton’s downtown office market, with vacancy rising as several large tenants downsized. It’s expected that Stantec Tower will see further momentum in 2023 as more firms contemplate moving to quality sublet space in the building.
Edmonton industrial is shining bright, however. A record amount of new supply was delivered to the market in 2022: more than 4.6 million sq. ft. And a further 3.7 million sq. ft. is under construction at the start of 2023. Along with the delivery of new space, the market witnessed a record 6.4 million sf of absorption in 2022 including Panatoni’s Amazon facility in Acheson
Edmonton Executive Vice President and Managing Director Dave Young tells us what he’s watching for in the city’s commercial real estate market this year.
We see a continuing flight to quality: buildings that are well-amenitized will outperform those that are not. Our financial district is becoming more lively as people return to the office and it is also leveraging what’s happening in ICE District on event nights. It’s good to see the financial district picking up and more energy being created in the city centre.
Like other cities, the core is still being impacted by hybrid work. There are more sublet opportunities coming available in the core in better buildings as tenants get a better understanding of their space needs. Tenants will have opportunities in 2023 that they may not have had in the past.
The suburban office market is continuing to show signs of strength. Like the core, landlords still need to deliver premises in buildings with upgraded common facilities to give a tenant a reason to come to the building. If you don’t have decent fitness-related offerings or activated retail space you may not get a tour. So our advice to landlords is to continue to reinvest in your buildings, because if you don’t it will get more challenging.
It’s remarkable that despite the record amount of new industrial supply delivered last year, the availability rate actually decreased – supply has not kept up with the demand. We see a similar year ahead in 2023, though not the same volume of space delivered. There is good momentum in the industrial business: Western Canada and Alberta in particular are benefiting from the space constraints and higher-priced alternatives in B.C.
I think Edmonton will continue to be that relief valve for what’s happening on the West Coast. But I actually see us becoming more of a first look rather than an option because of availability challenges in Vancouver.
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