EDMONTON – Edmonton’s office real estate market is climbing upward with the highest positive absorption in five years according to an Avison Young report.
In the third quarter of the year the Edmonton office market rose with 165,000 square feet of positive absorption, defined as more space being leased than vacated, which beats the previous record of 159,000 square feet of positive absorption in Q3 2018, a release said.
Approximately 83,000 square feet of positive absorption was in the government district in the downtown core and 86,000 square feet was in the city’s south side.
Significant transactions, the report said, included the Classical Academy Charter School leased 61,000 square feet on a five-year term at the former Service Alberta Building, located at 3720 76th Avenue and NorQuest College expanded its downtown footprint by leasing 63,000 square feet along Jasper Avenue within the Intact Building.
Office space has also been adopted for new uses, such as multifamily conversions both in Edmonton and across the country with functionally obsolete buildings available to be repurposed.
“Currently, several office buildings are in the process of being evaluated for potential conversion, a trend that we anticipate will persist. If the City of Edmonton were to initiate a subsidy program similar to Calgary’s recent successful effort, it would greatly enhance the economic viability of conversion projects. This, in turn, would encourage more conversions, resulting in a range of positive outcomes beyond merely bolstering the office market and addressing housing shortages,” the report said.
The vacancy rate in downtown Edmonton was 20.4 per cent, the report said, with an average lease rate of $18.15 per square foot. In suburban Edmonton the average lease rate per square foot is $15.14 with an average vacancy rate of 17.6 per cent. There is 18.1 million square feet of total inventory in downtown Edmonton and 15.7 million square feet in suburban Edmonton.
The report can be downloaded here.