Canada’s office vacancy rate hit 18.1% last quarter—a 29-year high, according to Commercial Real Estate Services (CBRE.)
The commercial real estate and analytics firm said the Q2 vacancy rate rose from 17.8% during the first three months of the year, indicating that work-from-home configurations brought about by the pandemic are having a lasting impact.
But there have not been so many empty offices since 1994, when Canada’s vacancy rate was 18.6%.
“Canadian office markets are grappling with a perfect storm of a recession threat, interest rate hikes, tech sector weakness, tenants rightsizing and new supply of office space,” said a CBRE news release.
“All of this is compounded by the continued uncertainty around remote work.”
The country’s downtown office vacancy rate increased to 18.9% in Q2, up by four basis points from the previous quarter, while it rose to 17.1% from 16.9% in suburban offices.
However, Calgary’s office vacancy rate declined to 31.5% in the second quarter from 32% in Q1, which CBRE attributed to growth in the city’s engineering, construction and education sectors.
“Calgary is also working its way through several office building conversion projects, which will reduce inventory,” the firm said.
CBRE also reported that Waterloo’s vacancy rate dipped from 22% in the first quarter of the year to 21.5% from April through June.
Among downtowns in the country’s three largest cities, Toronto’s office vacancy rate ticked up to 15.8% from 15.3% quarter-over-quarter, while Montreal’s rose by five basis points to 17%, and Vancouver’s hit 11.5% from 10.4%.
Three years after the first pandemic-induced lockdown, the office sector across the continent are still reeling. For example, Toronto and Vancouver for years had among North America’s lowest office vacancy rates, which were in the neighbourhood of 2%.
But new supply flooding the market also pushes the vacancy higher. According to CBRE’s data, there is 11.5 million square feet of office space under construction in Vancouver, followed by 2.7 million in Toronto, and 1.9 million in Montreal.
