LETHBRIDGE, ALTA. – A recently released Avison Young report projects increased demand in Lethbridge, Alta. for high-quality office space.
Overall vacancy continues to trend downward and lease rates in both downtown and suburban office space have had moderate growth year-over-year, a release said, with tenants in Lethbridge likely to see new space come to market by the end of 2024.
“Landlords looking to attract modern tenants need to invest in improvements that will increase the asset’s appeal and help grow its profitability over time,” Avison Young senior associate (Lethbridge office) Ashley Soames said in the release.
Gross lease rates in newer suburban developments in Lethbridge average $31.75 per-square-foot (psf), the release said, more than $5+ psf higher than office space in the downtown core, which averages $24.34 psf. The downtown Lethbridge office vacancy rate is 11.33 per cent, double the 5.82 per cent vacancy rate in suburban office space.
Downtown office space is close to amenities and accessible, the release added, but suburban spaces tend to be newer buildings and are closer to office workers who reside in surrounding areas.
“Tenants are prepared to pay higher lease rates for these quality spaces. With construction inflation and overall Consumer Price Index easing, there is new investment in the development of office space,” the release said.
“With construction inflation still significantly affecting development overhead, the expectations for market rents have been adjusted accordingly, and tenants looking for newly built office space seem to understand that,” Avison Young executive vice-president (Lethbridge office) Jeremy Roden said.
While some offices have reduced their footprints in response to remote and hybrid work, Soames said this was likely not a factor in Lethbridge.
“Because Lethbridge is a ‘15-minute city,’ a reduction in office footprints would not likely be a result of hybrid working arrangements,” Soames added.
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