The suburban Calgary office market is showing some early signs of stabilization despite the continued challenges in the city’s economy.
A report by CBRE says the market remained relatively flat throughout the first quarter of this year, experiencing only slight positive net absorption – the change in occupied space – of just under 15,000 square feet.
“This marks the third consecutive quarter of positive net absorption and the overall vacancy rate remains at 20.9 per cent,” said the report.
“The positive market fundamentals are a product of an optimistic yet slow growth suburban office market and several substantial transactions completed on a headlease bass. Notable lease transactions during Q1 2019 include: the Law Society leasing 59,408 square feet at 333 Centre, the Distress Centre leasing 12,589 square feet at 999 8th Street S.W., Orpyx occupying 15,604 square feet in Localmotive Crossing and ATI relocating into 11,654 square feet in 3333 8th Street S.E.”
CBRE said the proportion of sublease space continued to decline in the quarter, adding further pressure on landlords to compete for tenant interest.
“Due to similar gross rents in the suburbs and downtown core, suburban landlords continue to face the threat of large tenants moving into the core in order to take advantage of abundant amenities,” said the report.
“The uncertainty surrounding the approaching provincial and federal elections is factoring into the delay in tenants’ decision making processes.”
– Mario Toneguzzi