The Edmonton commercial sector’s prospects for the rest of the year are remarkably bright in terms of demand and rent growth, according to a market analysis by Marcus & Millichap.
In particular, the completion of around 1.2 million square feet of office space by the end of 2019 will be a considerable boost to the market’s activity levels.
“The completion of the 800,000-squarefoot Stantec Tower this year pushes deliveries well above the nearly 490,000 square feet added to Edmonton in 2018,” Marcus & Millichap explained. “Pre-leasing has been exceptional at new builds, leaving less than 5% of the pipeline available for lease, creating challenges for expanding firms.”
A significant proportion of purchases will actually be from established entities looking to move up to newer space that would better fit their needs.
“New and modern office space with the amenities employees desire is in high demand, though as tenants move to updated offices, older and less desirable space is left vacant,” the report added.
“Strong demand for multifamily and hospitality have provided an opportune use for inefficient and obsolete offices. Renovations and increased amenity packages at other properties can bring older office inventory back in favour with expanding firms.”
Furthermore, companies from outside the city will be drawn in by these attractive assets, in turn serving as added stimulus to commercial leasing activity.
Asking rents went up by around 1.6%. “After falling 1.2% in 2018, rent growth returns to a positive trajectory, increasing the average asking rate to 30.46 per square foot.”
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