Monday, January 18, 2010

Large markets suffer as commercial vacancy rises in Canada

Office space vacancy rates in Canada are expected to rise to 10 per cent by year-end 2010, but there will eventually be a strong recovery in commercial real estate, said Avison Young in its annual report.

"Opinion remains divided on the question of whether Canada's economy will see the beginning of a sustainable recovery in 2010, or whether a further correction is to come before things start to look up," said Bill Argeropoulos, Avison Young's VP and director of research in Canada.

But he says Canada still remains in better shape than the U.S., and many others around the world, and "is poised for a more rapid recovery," particularly in the retail sector.

The downside of the report was the prediction that the national office space vacancy rate will likely rise by one per cent in 2010. Two of the country's strongest markets -- Calgary and Toronto -- have been hit the hardest, both with vacancy rates already just above 10 per cent. This has largely been due to new supply hitting the market, said the report.

Things could get even worse in Calgary, where office space vacancies are predicted to reach as high as 18 per cent by 2012, according to Avison Young. In Vancouver, the rate is expected to rise three percentage points higher than a year ago to reach eight per cent.


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