National Office Vacancy Rate Predicted to Peak in 2024
1 min read.
The downtown office vacancy situation appears to be showing signs of improvement, hinting at a potential recovery for urban commercial spaces. In contrast to suburban office markets, downtown areas have encountered challenges due to an influx of new office supply. According to Colliers Canada's recent National Market Snapshot, a surprising 93% of this year's new office supply has poured into downtown regions, resulting in a downtown office vacancy rate of 15%.
The hesitancy in the return-to-office process has played a role in this disparity. Despite the optimism surrounding downtown markets, employees have been slower to return to these locations. Concerns related to public transportation, lengthy commutes, safety, and the appeal of flexible work arrangements have contributed to this delay. Adam Jacobs, Senior National Director of Research at Colliers Canada, suggests that downtown areas have likely weathered the worst of their vacancy problems, highlighting an emerging trend of improvement. This optimism is fueled by the limited availability of new office spaces in suburban areas, a factor contributing to lower vacancy rates compared to downtown areas. While markets like Vancouver and Toronto have experienced slight increases in vacancy rates—7.4% and 10.5%, respectively.
In conclusion, the future of downtown office spaces appears promising, with signs of gradual improvement following challenges posed by an influx of new supply. As new suburban office spaces become increasingly limited, the national office vacancy rate is predicted to peak in 2024, hinting at future opportunities and resilience in the commercial real estate market.
References
National market snapshot 2023 Q2. Colliers. (2023, July 18). https://www.collierscanada.com/en-ca/research/national-market-snapshot-2023-q2
Suburban Office vacancy rates continue to outperform downtown markets. (2023, July 25). https://financialpost.com/real-estate/property-post/suburban-office-vacancy-rates-outperform-downtown-markets
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