Newmark Knight Frank Devencore

Newmark Knight Frank Devencore

May 05, 2011 07:15 ET

Newmark Knight Frank Devencore Reports on Greater Ottawa Office Market

Reversal of Vacancy Trends Taking Shape

OTTAWA, ONTARIO--(Marketwire - May 5, 2011) - In its Real Estate Market Study published today, Newmark Knight Frank Devencore reported that over the latter half of 2010 and into the first months of 2011, the complexion of the Greater Ottawa market begun to change fairly dramatically. The decision by Public Works to vacate 1 million square feet in the city's core, combined with the 450,000 square feet of downtown space that Economic Development Canada will be leaving by year-end will likely cause vacancy rates to rise dramatically.

In the first quarter of this year, downtown Ottawa's Class "A" office vacancy rate stood at 5.6%, while the Class "B" rate was at 2.1%. As recently as the end of 2008, combined Class "A" and Class "B" vacancy rates were as low as 1.6%.

"By mid-2012 we may see vacancy rates in the 8% range," said Denis Shank, Vice-President and Broker at Devencore Real Estate Services Ltd. "This increase will fundamentally shift the landlord-tenant dynamic downtown, providing tenants with considerably more leverage than they have had in many years. Further, asking rental rates may begin to soften."

The Kanata market is also about to undergo a significant transformation. The 2008-2009 recession caused vacancy rates in the region to soar into the 20% range, but the federal government's recent purchase of he Nortel campus will change that by forcing some major tenant moves. These organizations will be seeking space in Kanata, which should give the real estate market a much needed shot in the arm, as these relocations should drive the absorption of much of the available Class "A" space in the area.

"The changes taking place in both the downtown and Kanata markets will not occur overnight, and will likely unfold over the next two to three years. But the corporate real estate market is becoming more dynamic by the minute, so tenants are best advised to evaluate their space needs and priorities well in advance or any lease renewal or possible expansion or relocation," said Jeffrey Shave, Senior Advisor at Devencore Real Estate Services Ltd.

Across the rest of the country, vacancy rates have continued to decline as the economy has strengthened. The overall vacancy rate in Class "A" and Class "B" buildings in Canada's major cities fell from 7.1% to 6.8% over the last six months of 2010, even as the total inventory of Class "A "and Class "B" office space increased. Should the economic recovery continue on its current path, Newmark Knight Frank Devencore expects that office vacancy rates should continue to decline across most of the country in the months ahead, and rental rates in some cities will likely begin to rise.

About Newmark Knight Frank Devencore

Devencore is the Canadian partner of Newmark Knight Frank, one of the largest independent real estate service firms in the world. Newmark Knight Frank Devencore is Canada's largest corporate real estate advisor and brokerage exclusively representing corporate, industrial and retail space users. With offices across the country, Newmark Knight Frank Devencore offers its global clientele comprehensive services that are individually designed to ensure executive real estate decisions are supported by effective strategies and professional execution.

Headquartered in New York, Newmark Knight Frank and London-based partner Knight Frank operate from over 220 offices in established and emerging property markets on six continents. With a combined staff of 7,300 and revenues last year exceeding $861 million, this major force in real estate is meeting the local and global needs of owners, tenants, investors and developers worldwide.

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Contact Information

  • Sylvie Bachand
    Director, Marketing and Communications
    514-392-1330, ext. 225
    Newmark Knight Frank Devencore
    Devencore Ltd.