Commercial real estate vacancies across Canada show a strong local economy is buffering Alberta from economic turmoil.
The national office vacancy rate was eight per cent in the third quarter this year, Royal LePage Commercial Inc. said last week.
That figure compares to 6.9 per cent in the third quarter of 2000 and 7.2 per cent in the middle of 2001. Calgary’s office vacancy rate held steady at 7.4 per cent from the previous quarter, though it was up from 6.7 per cent a year ago. Royal LePage attributed the rise to new supply in the core and the suburbs.
Toronto, Vancouver and Ottawa had heavier reliance on the hard-hit technology sector, said Alex Brough, vice-president and general sales manager in Calgary. Edmonton saw a decline in office vacancies to 10 per cent from 10.7 at mid-year and 11.5 per cent a year ago. There was no new supply, but increased demand for space from government and the oil and gas industry, said Royal LePage.
The Calgary office market is still in excellent shape, said Brough. The oil and gas business remains strong, as do the industrial and engineering sectors.
“Commodity prices are a bit off but they’re not in the tank,” he adds.
Six months ago, Brough says, he would have indicated Calgary would ride out a recession due to the strength of the oil and gas sector.
But things changed in the markets Sept. 11, when terrorist attacks in the U.S. sent shockwaves around the world.
Rob McElhoes, research director for Colliers International in Calgary, says it makes sense that Calgary has been hurt less than other cities by the economic slowdown.
Calgary’s office vacancy rate should stay at about 7.5 per cent for the next year, predicts McElhoes. Colliers’ third-quarter market report figures are due out next week.
(Different commercial real estate companies calculate vacancies in different ways, resulting in different vacancy rates for the same market.)
CB Richard Ellis Ltd. reports the national vacancy rate at 10.2 per cent in the third quarter, as the economy softened.
As well as the general slowdown, CBRE cited space rationalization, especially in the technology sector.
Calgary had a vacancy rate of 10.1 per cent, down from 10.4 per cent three months earlier and up from 9.8 per cent a year ago. Edmonton’s vacancy rate dropped to 10.9 per cent from 11.2 per cent in the second quarter and 13.4 per cent a year ago, CB Richard Ellis said, noting companies increasingly see Edmonton as an alternative to the more costly Calgary market.
