Avison Young on latest commercial trend
While the cost of building out new office space in Lethbridge, Alberta has spiked since 2019, the region has seen a “marked shift in demand” toward quality space, according to Avison Young.
During the second quarter, the market saw its office vacancy rate drop by 2.3% annually. At the same time, more than 36,676 square feet are in the planning stages.
“Inflation has driven up the cost of new construction and slowed investment in new development,” said Jeremy Roden, executive vice president in Avison Young’s Lethbridge office. “We have seen this most prevalently in office build-outs from shell space.”
Major factors that influenced these dynamics include the remote-work revolution, the shift in tenant expectations, and the steady rise in operational costs.
“New office owners and users are particularly challenged by the inflated expense of construction and labour, which has effectively doubled the cost of building out office space since 2019,” Avison Young said.
In the current environment, flexible and functional spaces reign supreme, the firm noted.
Such spaces “support corporate culture and help retain staff, over the per-square-foot cost of the space,” said Ashley Soames, senior associate at Avison Young Lethbridge office. “Successful landlords are taking this shift in mentality into account and are actively investing in their spaces.”
Much of the vacancy was seen in B-and C-class spaces. Older structures may need redevelopment to attract and retain modern users, Avison Young said.
“Lethbridge has seen positive net absorption and maintained steady lease rates with moderate increases,” Soames said. “We are optimistic about what the future of office work will look like in our city.”
