It has been a “rougher ride” than usual for the Ottawa office market, according to a report released by Avison Young on Wednesday.
The property management company said the downtown vacancy rate was at 8.8 per cent as of June 30, up three percentage points from the same time last year and a substantial increase from the rate of 4.8 per cent at this time in 2013.
“It is hoped that the slowing increase in vacancy is an indication that the worst is now past,” the report said.
The negative absorption of 2014 has been reversed in 2015, the report said, with asking net rental rates down year-over-year to $24.68 per square foot.
The story is different in Kanata, where the vacancy rate of 9.6 per cent as of June 30 is down significantly from the 11.9 per cent recorded at the midway point of 2014 – despite the addition of 230,000 square feet of inventory.
“Large-pocket vacancies were absorbed by another wave of technology companies that have discovered the rich vein of talent living in the Ottawa area,” resulting in an increase in asking net rental rates, Avison Young said.
The top four lease transactions this year by size have all happened in Kanata, with Sanmina-SCI, Solar Winds and Qlik all occupying space on March Road, and DNA Genotek taking space on Palladium Drive.
The report says any major expansion plans likely won’t happen until the federal election campaign is over, especially for companies that call the government a major customer.
Ongoing LRT construction is also going to have a real impact on the market, the report said, because light rail will offer easier access to many areas of the city – not just downtown.
“The impact of this project cannot be understated as hotel and retail developments in the core (and in proximity to future transit nodes) continue to appear on the Ottawa skyline.”