After completing a record 250,000 square feet of new office space in downtown Regina last year, developers are expected to add another 120,000 square feet of space tin 2013, or more than twice the annual construction pace over the previous decade.
Despite the robust building, Regina posted the lowest office vacancy rate in Canada until recently, according to Colliers International, at 1.92 per cent at the end of last year, when a record 195,000 square feet was leased up.
The downtown vacancy has changed big time, however. As of the first quarter of 2013, it had shot up to 6 per cent, the highest level since 2004.
Colliers's research manager Duncan Mayar said the amount of new space coming to the market "may increase the vacancy rate in the short term, but we expect strong market absorption will keep the vacancy rate stable."
He expects vacancy rates to be in the 5 per cent range through 2014.
A test of that stability will come in two years, when a new 10-storey, 160,000-square-foot office tower comes to the downtown market.
Ascending on Hamilton Street, the tower has Farm Credit Canada as the anchor tenant. The Agricultural Place high-rise will also include 50,000 square feet of street level retail.
A second tower of 240,000 square feet is planned for SGI Canada, to replace its existing 184,000 square-foot building. Three developers have been shortlisted for the project, which could also begin construction this year.
Class A office lease rates in Regina are ranging from $23 per square foot for existing space and up to $35 per square foot for new space, according to Colliers. The vacancy rate for Class B space is in the 10 per cent range, with leases rates between $15 to $20 per square foot, Colliers reports.
