Vancouver's office market has experienced one of the fastest increases in vacancy rates in Canada as challenging economic conditions coupled with access to capital constraints forced companies to reduce their office space needs, according to CB Richard Ellis' latest office and trends report.
Vancouver's first-quarter vacancy rate rose 1.3% year-over-year to 7.3% from 6% as companies in the region reduced their office space. While only marginally higher than the national average vacancy rate increase of 1.2%, it was only slightly below Edmonton's 1.6% increase and Calgary's 3.8% jump.
A winding down of investment capital into the region leading up to the 2010 Olympic Winter Games and a steep decline in commodity prices contributed to Vancouver's office vacancy increase.
But sliding energy prices have hit Calgary's office market with an 88% increase in office vacancy year-over-year to 8.1% from 4.3%. Capital investment in the province's energy sector has been scaled back, and Alberta's first provincial deficit in years is contributing to growing business uncertainty in the first quarter. Similar factors have affected Edmonton's office vacancy rate, which rose to 6.5% from 4.9%.
Toronto's vacancy rate increased to 7.7% from 6.8%, but did not rise faster due to limited new construction in the city's suburban market. However, new landmark properties approaching completion are likely to push vacancy rates even higher in subsequent quarters.
Low inventory continues to insulate Montreal's commercial market, but vacancy rates have risen to 8.8% from 7.9%.