Canadian Office Real Estate Vacancy Rate Hits the Highest Level in History
The Canadian office vacancy rate has reached 17.1% in the first quarter of 2024, up from 16.7% in Q4 2023, according to new data from Cushman & Wakefield.
This is the highest vacancy rate ever recorded, surpassing the 16.9% vacancy rate printed in 1992.
Drilling down, we find that central Class A vacancy (meaning downtown office space in Canada) was up from 17.1% Q4 2023 to 17.5% in Q1 2024, also the highest level ever recorded.
99 Million Square Feet Available for Lease, More to Come Online in 2024
There is currently 99 million square feet of office real estate space available for lease in Canada, this is up 7.5% year over year.
Additionally, Cushman and Wakefield estimates that there will be 5.5 million square feet of new inventory coming online in 2024:
As such, they anticipate that the office vacancy rate is expected to continue to climb throughout 2024, likely peaking in the beginning of 2025, depending on when new supply comes online.
Overall, there is 7.9 million sq/ft of office real-estate space under construction in Canada.
Small and Medium Sized Cities Hit the Hardest:
When it comes to office vacancy rates, small and medium-sized cities have been hit the hardest:
- Calgary is now sitting at a 26.6% vacancy rate
- Saint John is sitting at a staggering 35.7%
- Kitchener at 26.3%
- And London, Ontario at 21.2%
Rents Only Up 1% Year over Year
While vacancy rates have surged in since the pandemic, office real-estate rents have stagnated.
In Q1 2024, average office rents reached an average of $41 per square foot in Canada, up 1% YoY, according to the report.
Conversion From Office to Multi-Residential Expected to Continue
The report author expects conversions from office space to much needed residential real-estate to continue in 2024:
The conversion of vacant, obsolete office stock into different uses – primarily multi-residential – is anticipated to continue in 2024 in many markets across the country.
Cushman & Wakefield
