The quantity of vacant office space throughout the city reached new highs last year, before settling down by year-end, data released by international commercial real estate services company CBRE Ltd. shows.
Even at its peak, local rates came in far below the new national average high set during the final months of 2022.
“The office sector will face a bumpy 2023 as it contends with a potential recession, a re-structuring of the tech sector and continued uncertainty around the impact of hybrid work patterns,” said CBRE chairman Paul Morassutti in a news release highlighting vacancy trends in several major Canadian metropolitan areas.
Contacted by GuelphToday, the company sent localized data.
Guelph’s core, as CBRE calls it, has an inventory of about 675,000 square feet – the same quantity identified since the third quarter of 2019, which had about 1,000 square feet less.
Local data collection only began during the last quarter of 2018, when the core’s vacancy rate was identified as 1.8 per cent.
The core had zero vacancies during the first few months of 2020, as pandemic-related public health measures came into place. Among them was physical distancing, allowing two metres of space between individuals, which prompted many offices to have employees work from home.
Downtown office vacancies hit a high of 11.1 per cent during the third quarter of 2022, before settling down to 6.3 per cent by the time the year was done.
Guelph’s suburban area, which is everything outside of the core, has an inventory that has fluctuated between slightly more and just less than 1.5 million square feet since data collection began in late 2018.
The vacancy rate has remained relatively steady, largely coming in between 3.6 and 6.1 per cent. Exceptions include when it hit a high of eight per cent during the first quarter of 2022 and lows of 2.3 per cent and 2.7 per cent in the first two quarters of 2021.
Last year ended with a suburban vacancy rate of 5.9 per cent.
Looking beyond Guelph, the highest rates highlighted by CBRE at the end of 2022 were in Calgary, which had a core vacancy rate of 32.6 per cent and a suburban rate of 25.7 per cent.
In nearby Waterloo Region, the core vacancy rate was 22.8 per cent, with a suburban rate of 7.8 per cent.
The new national high for office vacancies – a combination of core and suburban areas – is 17.1 per cent, set in the final quarter of 2022.
“In the context of a looming recession, rising office vacancy isn’t necessarily a bad thing for all parties,” the CBRE news release states. “It means that office users now have a range of quality-space options, that landlords are offering greater inducements, and that the pressure to make decisions is greatly reduced compared to when downtown office vacancy in key Canadian markets hovered around two per cent prior to the pandemic.”
