The potential building boom would represent the biggest in 30 years. “There is more serious consideration of new development in the office market right now than at any time since the early 1980s,” said Avison Young Principal Cory Wosnack, who notes that only new office tower – Epcor – has been built since 1990.
“We predict that 2014 will be a game- changing year for the office market – one that will bring challenges for older inventory that faces a new competitive frontier,” Wosnack said.
That could be a wild frontier, especially if the city proceeds with a 450,000-square-foot high-rise at 101 Street and 104 Avenue. The city plans to take 350,000 square feet in the building and deliver the rest as speculative office space. If the tower proceeds – it would be built with Katz Group and WAM Developments – about 300,000 square feet of city-leased space in other parts of the city could go dark. At present, the city leases offices in various locations around the downtown, including Chancery Hall, TD Tower, HSBC Bank Place and Scotia Place. If a green light is given, the City of Edmonton tower would complete in 2017.
Office lease rates in the downtown are already softening, agents note, and could fall further if a glut of space emerges. Class A rental rates downtown now average $23.50 per square foot, according to DTZ, down from $30.59 in 2008.
Avison Young forecasts a recovery in the Edmonton office market this year, with a projected 250,000 square feet leased up in the downtown and another 125,000 square feet absorbed in suburban markets.
