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Vancouver office vacancy nosedives, while Calgary's skyrockets

Despite a ballooning vacancy rate, Calgary's office market is showing positive signs of recovery
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All of Western Canada’s office markets have reported an increase in leasing activity, reflected in decreasing vacancy rates in Vancouver and positive absorption in Alberta markets. However, falling demand in Metro Calgary has led to compressed rental rates.

Vancouver saw increases in inventory but the vacancy rates dropped. Vancouver watched its downtown vacancy rate drop for the eighth straight quarter, from 6 per cent in the third quarter of 2017 to 5.8 per cent in the fourth quarter 2017. New supply from the West Tower at Rogers Arena (70,000 square feet), One Burrard Place (150,000 square feet) and 400 West Georgia (350,000 square feet) is not anticipated to match increased demand.

The downtown Calgary office market experienced another year of increasing vacancy in 2017 but there were some positive signs of recovery. For the first time since 2012, Colliers International recorded two consecutive quarters of positive absorption in the second and third quarters. The final quarter of 2017 brought this cycle to an end with 266,000 square feet of negative absorption. The fourth quarter 2017 vacancy ballooned to 27.4 per cent and posted an average net rent of $14.50 per square foot – less than half of Vancouver’s average rate of $31.89.

Edmonton turned a corner in the final quarter of 2017, recording its first period of positive absorption since early 2015. Tenant growth led to a decreased office vacancy of 17.2 per cent and an average rent of $18.10 per square foot.

Toronto recorded over half a million in positive absorption in the fourth quarter of 20917, led by Class AAA product. High quality product continues to drive up demand and lease rates.