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Edmonton office leasing hit five-year high in 2023 as tenants returned

Demand came from the construction, public service and financial sectors
Manulife Place, left, is among the beneficiaries of a resurgence in office leasing in Edmonton.

Edmonton is taking the return to the office seriously, with leasing activity in the fourth quarter once again breaking records set in 2018.

“Edmonton's office market showed improvement, with vacancy rates commencing the year at 19.5 per cent and concluding at 18.6 per cent,” Avison Young reported Jan. 11. “The year ended with a total absorption of 234,641 square feet, making it the most absorption seen in Edmonton's office market since 2018. This performance underscores the market's promising trajectory, emphasizing its stability and ascending momentum.”

The second half of the year saw leasing activity rebound significantly, with two consecutive quarters reporting more than 100,000 square feet of positive absorption.

The fourth quarter saw more than half the total, with 139,584 square feet shaving 40 basis points off the vacancy rate.

Demand came from a variety of sectors, including construction, public service and financial services.

Alberta Infrastructure leased 65,865 square feet across three buildings, while civil contractor Morgan Construction and Environmental Ltd. subleased 20,569 square feet in the Finning Building.

High construction costs have also driven demand for existing space, which promises to further reduce vacancies this year.

CWB Financial Group announced plans to relocate its national headquarters to Manulife Place after ICE District Properties decided not to proceed with plans for a 16-storey office building on 104th Avenue south of Rogers Place. CWB was to take 12 floors in the project, but is now set to lease approximately 200,000 square feet at Manulife Place.

“This transaction will have a markedly positive impact Edmonton's downtown business landscape, as it relocates a considerable number of employees deeper into the core which will spark increased economic activity in the area,” Avison Young said. “Manulife Place will be undergoing a substantial redevelopment of the podium levels including the buildings amenities.”

One block away from Manulife Place, the next stage of the Rice Howard Place revitalization is enhancing the tower’s three-level podium. A new food hall is set to open this summer, with the rentable spaces and common areas benefitting from a more fluid and modern design. The food hall is set to open this summer.

Avison Young statistics show that the improvements in the office market were not limited to downtown.

Significant leasing activity in the ICE District as well as population growth on the city’s outskirts helped reduce suburban vacancies to 17 per cent in the fourth quarter.