Office Market Report / Third Quarter 2021
The third quarter of 2021 showed signs of continued optimism with an ongoing increase in market activity for both leasing and sales. While activity levels were higher, total absorption for the quarter resulted in a 0% change in overall market vacancy. The financial and government districts saw a 0.3% increase and 0.5% decrease in vacancy respectively. Owner-user sales, not-for-profit organizations and non-traditional space conversions drove a great deal of the activity during the third quarter of 2021. When compared to the same period last year, 2021 has shown a 20% increase in transaction volume and a 64% overall increase in square feet transacted year-to-date for the Avison Young Office Team.
The Avison Young Vitality Index reflected a steady return to office trend that continued into the third quarter. This trend inverted at the beginning of September with the fourth wave of the pandemic and resulting government guidelines causing many organizations to pause their return to office plans. Despite this, as of the end of the third quarter, Edmonton remained the leading Canadian city on the return to office recovery with 35% of the workforce returning to work to their downtown offices when compared with pre-pandemic levels. We anticipate the return to office trend to remain relatively static through to the end of the year, with return to office plans for many organizations being delayed to the fourth quarter of 2021 and into early 2022.
Top 15 Suburban Vacancies
+ Click on the map below to see the top 15 suburban buildings with the largest total vacancy
Contiguous suburban vacancies over 35,000 sf
Commerce South Office Park*: 84,678 sf
Edmonton Sun Building: 64,093 sf
Former Service Alberta Building: 62,333 sf
Edmonton Research Park Building: 56,064 sf
Go Auto Building*: 53,808 sf
Magna Engineering Building*: 50,000 sf
Prospect Place: 46,049 sf
Broadmoor Place VI: 43,093 sf
West Campus A*: 39,350 sf
Terrace Office Tower: 35,149 sf * = Sublease
The Southside submarket makes up 37% of all suburban vacant space
The West End submarket makes up 11% of all suburban vacant space
With historically low interest rates and the desire to control their own real estate, many organizations have found this to be an opportune time to purchase their real estate. Whether that be a freestanding office building, commercial condo or flex building, there has been a significant increase in owner-user sales throughout 2021. A few notable examples include:
- Terra Centre For Teen Parents sold their central location to purchase a larger office building just west of downtown to better serve the needs of their clients.
- Edmonton Catholic Separate School Division purchased an office building in east Edmonton to consolidate several locations into one central hub.
- Edmonton Police Association sold their central location to purchase a larger office building in northwest Edmonton to expand their service offering to their members.
Not-for-Profit & Associations
While many organizations put their office requirements on hold through the uncertainty of the pandemic, the not-for-profit community used this time as an opportunity to strategically position themselves for long term success. Whether this be expanding in an existing location, moving, adding locations, or purchasing a building, maximizing their footprint to better serve their clients has been at the forefront. Examples include:
- Catholic Social Services
- Prospect Human Services
- BILD Alberta
- Downtown Business Association
- Project Adult Literary Society
- Terra Centre for Teen Parents
- Edmonton Catholic Separate School Division
- YWCA Edmonton
- REACH Edmonton
Non-Traditional Space Conversions
Organizations are increasingly seeking unorthodox real estate solutions to meet non-traditional office requirements. With an abundance of unique options for lease and sale, many organizations have taken the opportunity to re-think their use of office space. This has allowed them to take advantage of opportunities in the market and create unique spaces where employees can feel inspired, safe, and collaborate with their colleagues in a post-COVID environment.
- Catholic Social Services relocated and consolidated two locations to a mixed-use office industrial building in north west Edmonton Why this move? Strong underground parking ratio, required square footage to consolidate, move-in ready
- Drivewyze relocated to a mixed-use industrial retail building off Calgary Trail and 54 Avenue Why this move? Required warehouse space, close to existing location, opportunity to design their own creative hub
- AHS and The Edmonton North Primary Care Network joined forces to transform the former Canadian Tire on Fort Road Why this move? Expand and provide multiple service lines within one building to better service the community
About the Vitality Index
The Vitality Index is a real-time window into the movement of people in major cities across North America. Working with its partner Orbital Insight, Avison Young’s data team has analyzed anonymized cell phone location data geofenced to unique locations – aggregated to estimate total foot traffic in major North America cities. The resulting AVANT by Avison Young dashboard allows easy, real-time access to comparisons to pre-pandemic levels to help guide companies and investors through uncertain times.
About the Market
The Edmonton office market experienced an active quarter with both leasing and sales transactions. The balanced absorption for the quarter resulted in a vacancy rate change of 0% quarter-over-quarter. Rental rates have generally held throughout the year, with landlords working to incentify tenants with increased improvement allowances and inducement packages. With the anticipation of increased vaccination levels and a resulting reduction in pandemic related restrictions, we remain optimistic coming into the end of 2021 and expect 2022 to be a very active year with high transaction volume.
Edmonton Office Market Statistics
Overall vacancy rate
Downtown vacancy rate
Suburban vacancy rate
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