"There are three condo developments that will put thousands of people directly in the downtown core which will bring businesses back to the core and create opportunities for landlords and investors," said Karl Innanen, managing director at Colliers International.
"There's the impression that rental rates are too expensive but I don't think that's the case. We’re seeing a thirst for office space in the tech sector, which has been great for the downtown.
"It's more about how the business is run and investors are finding opportunities for retail and office space, but it'll take some time before we see a full turnaround.”
In a recent report, CMHC cited stronger labour markets and population growth as two factors that will soon support the commercial market in the Kitchener-Waterloo region.
While it could be up to 18 months before Kitchener
sees a full revitalization of its downtown core, new residential projects at One Victoria and City Centre will strengthen the labour market and increase demand for commercial space, Innanen told CREW
. Duke Street is also another emerging area.
The future looks bright for the city’s urban core, but the current picture isn’t as rosy. With commercial space ranging from $8 to $20 or more per square foot, many businesses are struggling to afford the lofty prices for commercial space.
In the last six months alone, at least 10 businesses have announced closures or plan to leave the downtown core altogether. Between a lack of foot traffic and high rental rates, landlords are finding it tough to stay in operation.
However, according to Innanen, that will change once the condos are completed and more importantly, the city’s LRT, which is due in 2017; its construction was also causing business interruption.
“The impression has always been that businesses are leaving because rental rates are too expensive for small businesses to maintain, but at the end of the day, it’s all about location and selecting space that fits your business," said Innanen.
"You have to be strategic and make smart business decisions.”
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Kitchener's downtown commercial market is well on its way to keeping up with the city’s residential boom, with condo projects acting as catalysts for the core’s resurgence.