Edmonton’s overall office market remained relatively stable over the course of 2021, with the year-over-year vacancy rate decreasing by 0.8%. Some notable areas of change for the year occurred in the suburban market with an overall 3% decline in vacancy. The vacancy rates for this market were mainly driven down by absorption in Sherwood Park, Windermere, and the 149th Street submarket. Through 2021, the vacancy rate for Sherwood Park decreased by 3.4% and Windermere decreased by 5.2% since Q4 2020, with some significant leasing completed in the 149th Street district.
Throughout 2021 the Edmonton office market experienced modest levels of leasing activity, primarily driven by a flight-to-quality, as groups in A-class buildings made the move into AAA-class buildings. This led to the majority of AAA-class space being occupied, except for some significant sublease opportunities in the Stantec Tower. With the space in Stantec being attractively priced, we expect to see an increased amount of leasing activity within the financial district where tenants have more options to upgrade location, building quality, and amenities. As a result, A-class buildings could see a gradual increase to their vacancy rates unless they start considering significantly improving the quality of their assets or increasing tenant incentives. Activity levels in B-class and C-class assets are unlikely to fluctuate as many tenants seem content enjoying the lower rents found in those buildings. Overall, we anticipate leasing activity to improve throughout the first quarter of 2022 as tenants take advantage of favorable deal terms and health restrictions begin easing, thereby attracting more people back downtown and to the office.
As both employers and employees attain a clearer understanding of the ongoing state of the pandemic and how their future workplace strategy may evolve, leasing activity will resume in earnest as negotiations are pushed forward from Q4 2021 into the early part of 2022.
With many major office occupiers continuing to work from home, employers are keen to find ways to get their staff back into the office to re-ignite company culture and foster better collaboration and connectivity between employees.
However, as employees start getting called back into the office on a full-time basis there will remain some level of concern about interior air quality. Therefore, for employers to ensure a safe and healthy workspace, businesses will be drawn towards spaces with modern building systems that will meet the generally higher demands of employees.
The anticipated return to the office means tenants and building owners are needing to carefully rethink communal spaces and shared amenities. Major office occupying businesses will be looking at the state-of-the-art office towers that offer both ample space and desired amenities, while also providing essential sanitation and robust ventilation systems. These high-quality spaces are thoughtfully designed to make employees feel safe in their place of work with the added benefit of feeling comfortable and rewarded by modern designs and amenities thereby enticing employees to leave their home office. Those businesses opting for office upgrades believe pulling out all the stops is necessary to not only get employees back into the office but to help recruit and retain talent in an increasingly tight labor market.
2021 District Overview
+ Click on the map below to see district summaries
Government District
The government district continues to have some of the highest vacancy rates within the city, primarily in A-class buildings with a notable vacancy in B-class buildings. These vacancy rates have remained consistently high throughout 2021, however, some notable changes are predicted for 2022. The total vacancy space is spread across 26 buildings to varying degrees. Most A-class government vacancies are primarily found in WSP Place, Devonian Building, Intact Building, and the former Stantec Centre. Notable B-class building vacancies are in Highfield Place, Baker Centre and Energy Square. However, the government district experienced some substantial absorption amongst C-class products, mainly due to the removal of the Legislative Annex building from the inventory, as structural demolition began in Q4.
Financial District
The financial district’s rising vacancy rates have been driven primarily by A-class and B-class buildings which have increased year-over-year by 1.1% and 2.9%, respectively, while both remaining unchanged from the previous quarter. AAA-class buildings have experienced the most significant drop in vacancy rates with a decrease of 2.1% year-over-year, due in large part to an increase in sublease opportunities. Once the Government of Alberta lifts the recommended work-from-home mandate we can anticipate a further increase in activity and a positive impact on the market.
Whyte Avenue
There has been an increase in activity on Whyte Avenue, causing a slight decrease in vacancy rates through the first half of Q4. However, the vacancy at the former Incite Marketing building was the main origin for the end of the quarter increase of 1.4%. Whyte Avenue has an extremely positive impact on Edmonton as a pivotal community filled with culture and entertainment. Through Q4, Whyte Avenue experienced an average of 10,000 visitors on a weekend and 25,371 visitors on a weekday equating to a 57% and 49% increase from Q4 of 2020. Whyte Avenue has seen an evolution in the form of exciting development projects, an influx of new local businesses, and a strong cultural identity on full display. Office users continue to be drawn to the art, food, music, and entertainment culture of Whyte Avenue as demonstrated by increased demand for co-working groups in the area. Interest in the Whyte Avenue submarket is only being amplified with the countless new exciting projects underway including the future addition of several multi-family residence opportunities.
Eastgate
The Q4 vacancy rate remained steady at 11.5% from Q3 with some notable absorption coming from the Centre for Autism Services Alberta that leased 11,607 sf at Parkwood Office Centre.
149th Street
While the vacancy rate for this district has increased slightly for Q4, however, there has been significant activity in the district throughout 2021. Notable transactions completed at Nexus Business Centre include Alberta Health Services moving into 11,228 sf and 4 Points Health and Wellness moving into 5,300 sf. Additionally, Catholic Social Services moved into just over 25,000 sf in Alberta Park. Each of these transactions represented an influx of activity moving from other districts, resulting in positive absorption.
West End
The West End saw a vacancy rate increase of 2.0% from Q3 to Q4 of 2021. The cause of the increased vacancy for this suburban market is attributed to approximately 60,000 sf of space becoming available at the Ford Credit Building. However, the jump in available space is likely temporary as some notable leasing is expected in early 2022.
Windermere
The Q4 vacancy rate saw a drop by 0.8% from Q3 2021, with two notable sales completed at the Windermere Health and Business Centre, with an education-based tenant for absorbing approximately 2,200 sf, as well as 4,500 sf sold to a medical user. These transactions are accompanied by approximately 4,000 sf of leasing at the Jayman Building. The leasing and sale of units completed at these two properties throughout the year have been the primary contributors to the year-over-year reduction in overall vacancy for this submarket.
Sherwood Park
Sherwood Park experienced a significant decrease in vacancy rates through 2021 with a year-over-year reduction of 3.4%, with most activity happening in the second half of the year. While Sherwood Park has been experiencing some notable interest from a diverse mix of tenants, its Q4 decrease is largely attributed to substantial leasing activity at Broadmoor Place with an approximated 3% reduction in vacancy amongst all its buildings, coupled with additional absorption at the Park Centre building.
Edmonton Office Market Statistics
16.2%
Overall vacancy rate
17.2%
Downtown vacancy rate
15.0%
Suburban vacancy rate
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