There is now more office construction underway in the suburbs of Calgary, Edmonton and Vancouver than there is in the downtowns and - with the exception of a single Calgary tower - more space is being leased in the 'burbs than in the core of all three cities.
The suburban shift spreads further than Western Canada's three largest cities: it is a national trend that has far reaching implications, according to a recent study.
"While frequently overshadowed by thriving downtown markets, the suburban office market should not be written off," said John O'Bryan, chairman of CBRE Ltd. Vacancy rates remain higher in the suburbs, but these secondary markets have proved much more resilient than downtowns "despite two challenging years."
The proof is in the numbers. Suburban demand has seen total annual absorption in Canada reach 2.2 million square feet in 2011 and 2.4 million square feet in 2012. In comparison, downtown office absorption was cut in half from 5.7 million square feet in 2011 to 2.4 million square feet in 2012.
In Vancouver, 465,000 square feet of suburban offices were leased up last year, while the downtown experience negative leasing of 157,500 square feet. Edmonton's suburban markets saw a take up of 328,000 square feet, compared to just 245,000 square feet downtown.
In Calgary, 2 million square feet was leased downtown last year, but it was nearly all in the 1.8 million square foot Bow Tower, which opened in the first quarter. Take the Bow out and less office space was taken up downtown than the 328,000 square foot in the suburbs, according to CBRE.
See a full report on the Western Canada office market in the March issue of Western Investor
