In the report, released by Colliers International, the brokerage’s chief economist Andrew Nelson said: “The fall in oil prices has had a negative impact on the energy-reliant markets [in Western Canada],” which has contributed to rising vacancy rates and decreasing rental prices.
Vacancy rates jumped over the course of the second quarter. In Calgary’s case, Colliers reported that the downtown vacancy rate rose to 13% from 10%, while Edmonton’s vacancy rate increased to 11.2% from 10.6%.
A glut of new buildings under construction in both cities could push those numbers up even higher.
“Canada is also in the midst of an ill-timed supply surge that caused vacancy rates to rise even in markets with positive absorption in [the second quarter],” the report noted.
The report showed that 1.7 million square feet of office space has become available in Calgary’s downtown core, thanks in part to thousands of layoffs in the oil patch and a decline in the need for commercial space.
That is the largest quantity of newly empty space in any downtown in North America, including Houston, an oil and gas town where 1.6 million square feet have become available this year.
Edmonton posted positive absorption numbers in the second quarter, but is still down over the course of the year. So far this year, 8,400 square feet of downtown office space has gone on the market in the city this year.
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It’s going from bad to worse for the commercial real estate market in Alberta, as a new report says vacancy rates will climb and rental prices are going to continue to fall in the province’s two largest urban centres.