Market dynamics in Q2 have placed Ottawa into a "bear market", new report says
In response to multiple market pressures, the Ottawa office market is likely to see continued increases in availability for the foreseeable future, according to Avison Young.
The region’s total office availability rate went up by 2.3% on an annual basis to reach 13.6% during the second quarter. Total lease area in the region amounted to 5.7 million square feet, up by approximately 1 million sf since Q2 2022.
“The Ottawa office market has recorded a further half-point growth in the availability rate and should see continued increases across the region,” Avison Young said in its new report.
“A greater than anticipated statement from the federal government regarding the amount of space they intend to put back onto the market has pulled Ottawa into a ‘bear market’. Net effective rental rates (NERs) – or the landlord’s return after accounting for securing tenant costs – have now reached record lows.”
Ottawa’s average gross asking rent per square foot (psf) stood at $33.95 in Q2. The figure includes $18.06 psf in average additional rent, Avison Young said.
The price trend bodes well for organizations that have already confirmed their post-pandemic office plans and usage, the report noted.
“Tenants looking to relocate or negotiate a renewal will find their landlord much more receptive to negotiating cash incentives or free rent provisions than they were pre-COVID,” Avison Young said.
“The rise of co-working spaces and the model under which they operate could potentially bring many advantages to businesses and the federal government looking to keep up with the evolving office marketplace.”
