Office vacancy rate plummets

March 19, 2008
Winnipeg Free Press
Written by: Murray McNeill

Winnipeg's downtown office vacancy rate has plummeted by a third in less than three months, leaving it with one of the lowest overall vacancy rates among Canada's major cities, according to CB Richard Ellis.

The Toronto-based commercial real estate firm pegs Winnipeg's overall office vacancy rate at 5.4 per cent -- fourth lowest among the country's 10 largest office markets.

That's a big improvement from the end of 2007, when Winnipeg's overall (downtown and suburban) vacancy rate was 7.8 per cent, the firm said. But in the downtown alone, the rate plunged to six per cent from 9.2 per cent at the end of the last year.

Paul Kuzina, an office leasing specialist with CB Richard Ellis Chartier Associates, said that's the lowest that the overall and downtown vacancy rates have been since the Winnipeg office began tracking them in 2003.

Several others also track local vacancy rates, including Colliers Pratt McGarry and Wayne Johnson, a commercial real estate agent with Royal LePage Dynamic Real Estate.

However, they don't all track the same number of buildings, so their figures vary. For example, Colliers pegged the city's overall rate at 6.8 per cent at the end of 2007, while Johnson put it at 5.9 per cent.

Kuzina said 225,000 square feet of space has been snapped up since the start of the year, "which is a very substantial amount for the Winnipeg market".

The bulk of it has been in the downtown, where most office space is found, and leasing has been spread among all three major classes of space -- A, B and C.

Some of the major downtown Class A deals that have taken place in the first quarter of this year are the leasing of 40,000 square feet in Canwest Place to Meyers Norris Penny, and 4,000 square feet in the Commodity Exchange Tower to a Calgary-based human resources specialist -- Maxim Group, Kuzina said.

In Class B, the federal government and the City of Winnipeg gobbled up most of the 68,000 square feet of empty space in cityplace on Donald Street, he said, and in Class C, the federal government leased the entire third floor (25,000 square feet) of the Grain Exchange Building on Lombard Avenue, and an unidentified call centre leased 15,000 square feet in the Heritage Building at 136 Market Ave.

Altus InSite, which tracks national office data, lists several other Winnipeg transactions. They include the Manitoba government leasing 33,000 square feet in the Credit Union Central building on Donald, Entegra Credit Union leasing 3,500 square feet in Canwest Place, and the Manitoba Business Council leasing 2,565 square feet in the Bank of Canada building at 161 Portage Ave. E.

Kuzina said it's mainly government departments and local businesses that have been behind the spurt in leasing. There are still few out-of-province firms moving here, he said, which is partly why leasing had been so sluggish prior to the start of this year.

Kuzina said he expects leasing to ease in the coming months, and for not much further change in the downtown and overall vacancy rates.

One new development that will have an impact on the downtown vacancy rate, although not until next year, is the Winnipeg Real Health Authority's announcement Tuesday that it will be moving from 155 Carlton Street to a new 80,000 square foot office/parking/retail complex that will be built this year at Main Street and Higgins Avenue.

The complex is part of a $40-million revitalization project that CentreVenture Development Corp. unveiled Tuesday at its annual general meeting.

WRHA spokeswoman Heidi Graham said the health authority leases 43,000 square feet in Lakeview Square, and will be giving it all up when it moves next summer.

She said only the head office operations will be moving to Main Street. The authority's patient safety and research and applied learning departments will be relocating to Concordia Hospital, and the Regional Health Authorities of Manitoba office and some other WRHA departments will be relocating to Deer Lodge Hospital.

murray.mcneill@freepress.mb.ca

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