Office Market Statistics of Waterloo Region
2Q2010, CBRE 3Q2010, CBRE Inventory: 13,542,651 sq ft Inventory: 13,783,551 sq ft Under Construction: 480,452 sq ft Under Construction: 247,786 sq ft Vacancy Rate: 5.2% Vacancy Rate: 4.4%
Colliers 3Q Market Update
Vacancy: Up
Net Absorption: Down
Sale Price (PSF): Flat
Rental Rate: Down
Trendy developments in the right location fill up quickly
By Chuck Howitt, Record staff - January 22, 2010
http://news.therecord.com/Business/article/660219
A For Lease sign outside the McPherson Centre building at King and Water streets in downtown Kitchener.
WATERLOO REGION — To paraphrase Charles Dickens, it was a tale of two buildings.
While vacant office space was snapped up quickly in the new Bauer Buildings development in downtown Waterloo when it came on the market in the middle of last year, Cambridge Place remains half empty nearly two years after the city vacated the building for its new city hall.
The fate of the two buildings reflects sharp differences in the local office market among the three cities in Waterloo Region at the close of 2009.
With a vacancy rate of 11.5 per cent, office space is scarce in Waterloo. With a rate of 28.5 per cent, anyone looking for desk space in Cambridge can strike a pretty good deal. Aided by spillover from Waterloo, Kitchener falls roughly in between at 17.5 per cent.
Cambridge also has the smallest supply at 800,000 square feet, compared to 2.5 million in Kitchener and 2.1 million in Waterloo.
By year’s end, the office vacancy rate for the region stood at 16.5 per cent, up 1.7 per cent from the previous quarter.
Those figures were presented today during a seminar on the local commercial and industrial real estate markets hosted by Colliers International.
With “great amenities” such as the Vincenzo’s food store, the Bauer Lofts condos and ample parking of four spots per 1,000 square feet of space, the Bauer Buildings quickly attracted such tenants as CIBC Wood Gundy, BDO Dunwoody and Moxy Media, said John Lind of Colliers. “It was a real success story.”
Parking was a key factor. The Allen Square building across the road at 180 King St., with 2.5 spots per 1,000 square feet of space, still has empty space. In parking-starved Toronto, this space would be snapped up quickly, noted Dave Young of Colliers.
Meanwhile, Cambridge Place has 50,000 square feet begging for occupants. The owners may have no choice but to convert the building into other uses, said Karl Innanen, managing director of the local Colliers office.
Also swelling vacancy rates in Cambridge is an ample supply of office space along Highway 401 built prior to the recession, he said. Developers erected this space on spec, without lining up tenants beforehand.
Building conversions are another success story and a growing trend, he said. The old Lang Tannery in downtown Kitchener is being redeveloped with a mix of uses including office, restaurants and specialty retail. It has already attracted tenants such as the Digital Media Convergence Centre, Desire2Learn and the Downtown Community Health Centre. Innanen called this a “villaging of space.”
Fuelling demand for this project are key neighbours such as the University of Waterloo School of Pharmacy and the area’s designation as a future transit hub, he noted.
While Waterloo rules the office market, the opposite is true in industrial real estate. Cambridge dominates with an inventory of 30 million square feet, following by Kitchener with 21 million and Waterloo with 10 million. Waterloo is hurt by its distance from Highway 401, Innanen said.
Still feeling the effects of the recession, the industrial vacancy rate in the region nearly doubled from 4.9 per cent in 2008 to 8 per cent in 2009. While the market took a shock, with the rate still below 10 per cent, “it’s still not horrible,” he said.
Among the three cities, Cambridge has the highest vacancy rate at 8.6 per cent, followed by Kitchener at 7.6 per cent and Waterloo at 7.4 per cent.
Sometimes, one large building can skew the numbers. In Kitchener, the former Kaufman warehouse at 137 Glasgow St. remains empty. At 350,000 square feet, it boosts the rate by 1.7 per cent all by itself.
While smaller buildings have been faring well during the recession, larger ones above 25,000 square have not, victimized by the weak economy and high Canadian dollar.
The closure of ClosetMaid, AGS Automotive and E.D. Smith put 917,000 square feet on the market in Cambridge last year and drove up the vacancy rate by three per cent. Halting the slide was Research In Motion’s purchase of ClosetMaid later in 2009.
One of the biggest transactions in Kitchener involved the former BF Goodrich plant on Wilson Avenue. Yazaki North America, a Japanese auto parts distributor, is leasing 200,000 square feet. But Kitchener’s gain is Cambridge’s loss as Yazaki is moving from Struck Court in Cambridge.
The plentiful supply of larger buildings is driving down prices. The ClosetMaid plant was listed at $49 per square foot, but sold at $33. The former B&W Heat Treating plant at 309 Trillium Dr. in Kitchener started at more than $80 per square foot, then fell to $65 and sold at $30, said John Frezell of Colliers.
In the multi-family residential sector, a student building at 345 King St. in Waterloo recently sold for $27 million. With 76 five-bedroom units, that’s about $360,000 per suite, said Innanen.
The student market has moved out of basements and attics, but remains risky because of a high turnover rate, wear and tear, and the danger that universities may build more residences, he said.
I've walked around the Bauer office space and it's real nice. Very rustic and urban.
Last edited by UrbanWaterloo; 02-10-2010 at 10:03 AM.
Good article! It'll be interesting to see how things change this year. Especially with the new announcement of the wind power deal. I'm hoping Waterloo Region gets a chunk of that, both in the research/business/manufacturing part of it.
I agree with some of the arguments in this article why space at the Bauer Buildings would be snapped up quickly and at a premium compared to other complexes.Originally Posted by Bauer123
However I find I disagree with the Colliers Office Space estimates as they seem too low. Perhaps someone would be able to give us a better idea how they do their calculations.
For example they list the entire Kitchener Office Space Market at 2.5 million with a vacancy rate of 17.5%.
CBRE has much different stats, with Kitchener having 4,724,898 sq feet of space with a vacancy of 7.8%.
Same goes for Waterloo - Colliers Total Space 2.1 million; 11.5 % vacant
CBRE: Waterloo - Total Space 4,787,511; 4.5% vacant
Cambridge - Colliers 800,000; 28.5% vacant
CBRE: Cambridge - Total Space 2,325,494; 9.1% vacant
So according to Colliers we're in a severe recession/depression, but according to CBRE we're actually doing alright. I tend to agree with the latter.
Last edited by UrbanWaterloo; 01-26-2010 at 04:28 PM.
CBRE Market View - Waterloo Region 4Q2009
Link
Last edited by UrbanWaterloo; 01-31-2010 at 08:05 AM.
240,000 sq ft of office space under construction in Kitchener's core? The Tannery and?
I'm going to assume it's basically all The Tannery; as they're probably waiting until the whole project is complete to label it constructed in their database.
The national numbers are out for the past year. Although I'm disappointed Waterloo Region's 2009 office market growth was driven by the suburbs, there were a few good points.
Regardless of how small it was, we did have growth in our core office market during 2009, one of 4 (out of 10) metros to do so.
Waterloo Region's office market had the largest increase in Canada of increased rented space during 2009.
2009 Total Office Market Net Absorption - SF (000s)
Waterloo Region 193.0
Halifax 141.2
Toronto 131.8
Ottawa 37.6
London -4.2
Winnipeg -241.1
Edmonton -342.8
Vancouver -768.8
Calgary -978.0
Montreal -1,017.5
Last edited by UrbanWaterloo; 02-10-2010 at 10:48 AM.
Colliers has posted their latest Office Market Report for the area. I have to say I disagree with their methodology: "A competitive building must be less than 50% owner occupied. Government buildings and medial office space are not included in this survey."
In my opinion it fails to capture the true size & strength of our local office market. Companies like RIM, Sunlife, Manulife and Economical just aren't counted. Large government buildings like Kitchener City Hall or the Regional Public Health and Social Services do represent office space and workers in Downtown Kitchener and Uptown Waterloo respectively.
Colliers - Waterloo Region Office Market - 4Q2009
SIGNS OF STABILITY RETURN TO CANADA’S COMMERCIAL REAL ESTATE MARKET
- Economic fundamentals slowly start to improve; the commercial real estate market follows but first quarter vacancy rates across the country still on the rise -
(TORONTO, ON) – Tuesday March 23, 2010 – http://www.cbre.ca/NR/rdonlyres/9170...ReleaseFIN.pdf
After more than a year of steadily increasing vacancy rates, signs of an improving economy – albeit modest ones – are starting to shape the 2010 commercial real estate market, according to the National Office and Industrial Trends First Quarter Report released today by CB Richard Ellis Limited (CBRE).
While economic fundamentals have slowly reintroduced some consistency back into the Canadian commercial real estate market, conditions across much of the country remain challenging. Nationally, the downtown and suburban office markets that were burdened by oversupply for much of 2009 continued to struggle in the first quarter, as overall vacancy rates rose from 7.5 to 10.1 per cent, yearover- year.
When compared to the fourth quarter 2009 overall vacancy rate – which stood at 9.9 per cent – this quarter’s vacancy rate increase represented a rise of only 20 basis points – a statistic that according to John O’Bryan, vice-chairman, CB Richard Ellis, is an indication that Canada’s commercial real estate market may just be through the worst of the recession.
“A more promising employment picture, slowly improving leasing activity and the residual impact those factors have had on the country’s commercial real estate market is a welcome change from 2009 conditions,” explained O’Bryan. “Expect to see a slow recovery progressively in 2010. With a few notable exceptions, the majority of Canada’s markets appear to be over the hump.”
Other notable changes in first quarter market activity include sublet space as a percentage of vacant office space, which rose only marginally in the first quarter, up from 20.8 to 21.9 per cent, year-overyear.
...
The overall office vacancy rate in the Waterloo Region increased in the first quarter, from 5.6 to 6.7 per cent, year-over-year. Despite reporting an increase in vacancy over the past twelve months, figures remained steady from the previous quarter – indicating that the area’s office market stands on solid footing. In fact, the Waterloo Region’s office market is one of the most stable in the country, bolstered by the presence of technology companies and their desire to be near surrounding universities. In comparison, the industrial market has not been as strong, with many buildings greater than 30,000 square feet sitting empty - a direct result of the shrinking automotive industry.
We simply are not seeing the same level of opportunity come via US businesses operating in Waterloo,” said Peter Hall, Senior Vice President and Managing Director, CB Richard Ellis, Waterloo Region. “The upside of this situation, however, is that immense opportunity now exists for savvy buyers.”
2010 Market Outlook National: http://www.cbre.ca/NR/rdonlyres/DE90...10National.pdf
2010 Market Outlook Waterloo Region: http://www.cbre.ca/NR/rdonlyres/DE90...rlooRegion.pdf
2010 Southwestern Ontario Market Outlook
http://www.cbre.ca/EN/Our+Offices/On.../2010swontmob/
Peter Hall's Presentation: The Southwestern Ontario Real Estate Outlook
http://www.cbre.ca/NR/rdonlyres/A654...stributePH.pdf
I'm surprised at how Kitchener and Waterloo EACH seem to have as many office buildings in them as London does. But I guess it makes sense if you think of London's being more concentrated in a few large downtown buildings (i.e. One London Place) as compared to numerous smaller buildings in KW. The amount of total office space might be more comparable. The massive number of industrial buildings in Cambridge is no surprise considering the direct relationship to the 401.
Are you referring to Page 3's "Office Listings by City 1Q10"? If so I find their data is saying the opposite in terms of building size.
London
Office Space: 5,400,000 square feet
Listings: 79
Average Office Space per Listing: 68,354 square feet
Waterloo
Office Space: 4,800,000 square feet
Listings: 38
Average Office Space per Listing: 126,315 square feet
Kitchener
Office Space: 4,700,000 square feet
Listings: 57
Average Office Space per Listing: 82,456 square feet
That said, I do prefer London's Core:Suburban ratio, approx. 80:20, vs 50:50 in Kitchener and 25:75 in Waterloo.
I am happy to explain our numbers to anybody who cares to understand them. I'm the first to admit they are not intuitive at first glance but for those that rely on them, they are incisive.
John Lind
519-570-1330
COMMERCIAL REAL ESTATE MARKET SHOWS RESILIENCE IN SECOND QUARTER
Demand remains stable as new inventory keeps vacancy rates from contracting
TORONTO, ON | Monday, June 21, 2010 | http://www.cbre.ca/NR/rdonlyres/9170...rendsfinal.pdf
Demand for commercial space was steady in Canada’s major office and industrial markets, as vacancy rates remained stable or were trending slightly higher in most cities, year-over-year, according to the National Office and Industrial Trends Second Quarter Report from CB Richard Ellis Limited (CBRE) released today.
The overall vacancy rate for the downtown and suburban markets has held at 10.1 per cent in both first and second quarters of 2010 (up from 8.3 per cent in the second quarter of 2009). The year-over-year increase was not an indication of weaker activity, but reflected the sheer volume of newly constructed space that became available in major markets over the last 12-18 months.
In 2010, a total of 2,719,328 square feet (sq.ft.) of newly constructed supply has been completed, year-to-date (YTD), with a significant amount of that space being added in Toronto and Calgary. This is an increase over the second quarter of 2009, when 2,503,340 sq.ft YTD was added to the market.
The sublease market, which is a good indicator of improving market conditions, has decreased to 19.4 per cent of vacant space in second quarter from 21.8 per cent in first quarter 2010 and 22.9 per cent, year-over-year. Tenants were taking back space that had previously been on the sublet market and more sublease space was converted into long-term leases.
“It is remarkable to see the numbers holding steady given the current economic climate and the sheer amount of new construction that has been introduced to the market. The flood of new supply is not overpowering demand,” explained John O’Bryan, vice-chairman, CB Richard Ellis Limited. “The panic of last year has largely been replaced by an extraordinary level of resiliency. We are seeing slow and steady improvements as nearly all of the office markets are at or near their bottom and positioned to move into a more positive cycle.”
The positive signs in the commercial market are underpinned by the strength of the banking sector, which not only provides the necessary liquidity to fuel commercial activity but also continues to expand tenancy in Class A space, particularly in Toronto and Vancouver.
“The fundamentals in the financial sector are strong and helping to stabilize the market as a whole,” added O’Bryan.
In Vancouver, the overall vacancy rate increased from 7.8 to 10.2 per cent, year-over-year, as 370,018 sq. ft. of newly constructed space was added to the market YTD, compared with 137,000 sq. ft. at the same time in 2009. Despite the net vacancy increase, activity in Vancouver was on the rise. In the downtown core, there was only marginal availability for Class A and B space. Activity was also on the rise in the industrial market, particularly among engineering, resource sector and junior mining companies. In the suburban areas of Burnaby and Richmond, large available industrial spaces are becoming increasingly difficult to find. Availability is much greater in smaller industrialized condominium units in these areas as more supply comes to market. These units are mainly occupied by smaller industrial businesses whose owners are taking advantage of low interest rates to purchase the properties.
Calgary experienced the biggest jump in vacancy in the country in the second quarter, with the overall rate rising to 15.7 per cent compared to 10.2 per cent, in the second quarter of 2009. The city also had the highest amount of new construction added to its market (1,228,606 sq. ft. YTD). Activity has dramatically improved but growth has remained generally flat. There has been a flight to quality as some tenants have taken advantage of depressed rents and traded up space moving from B to A class properties, but there has been little to no expansion. With 80 per cent of the downtown core occupied by natural resource-related companies, this sector will continue to influence the commercial real estate market.
The first half of 2010 saw a slowdown in leasing activity in Edmonton, however tour activity has increased in the last few weeks. Vacancy has increased to 10.5 per cent since the end of 2009. The key demand drivers that were active in the peak of the market have been inactive with the provincial government, engineering firms and companies servicing the oil and gas industry not expanding in the present environment. Tenant retention will be key over the next 18 to 24 months.
Winnipeg maintained a relatively stable vacancy rate in the second quarter at 8.0 per cent, compared with 7.9 per cent in the second quarter of 2009. Winnipeg’s vacancy rate remains one of the lowest of Canada’s major cities and the absence of any new construction in 2010 has helped maintain the market.
In Toronto, major increases in new construction have contributed to the year-over-year vacancy rate increase, which rose from 8.4 per cent in second quarter 2009 to 9.6 per cent in second quarter 2010. There has been 1,059,606 sq.ft. of new construction added to the market year-to-date, compared with only 266,576 sq.ft. at the same time last year. These new deliveries are being absorbed slowly, but steadily. The strength of the Canadian financial sector, headquartered in the downtown core, is bolstering market activity in Toronto. Sub-leases that offer good benefits to tenants are quickly absorbed.
Recording the lowest vacancy rate in Canada, Waterloo Region’s rate shrunk slightly from 5.9 per cent to 5.2 per cent, year-over-year. A significant drop in newly added construction year-to-date over 2009 contributed to the contraction as well as positive absorption of 217,503 sq. ft. taking place in the second quarter. The high tech sector continued to require increased office space, creating opportunity for developers to bring more office space on stream through new construction or conversion of industrial space to office to satisfy demand.
London’s office vacancy rate inched upward during the second quarter, from 13.2 per cent to 13.9 per cent, year-over-year. The market continues to stabilize with economic improvement in the industrial sector boding well for the rest of the year as space is being repurposed or reopened in the city, however no new construction has been added in 2010.
The office market in Ottawa remained stable, with the vacancy rate up marginally from 5.1 per cent to 5.3 per cent, year-over-year. Increased confidence in the marketplace has led to a mild upswing in market velocity, specifically with some larger transactions taking place in Kanata with approximately 100, 000 sq. ft. of positive absorption.
Despite an increase in year-over-year vacancy rates for Montreal's office market from 9.7 per cent to 10.8 per cent, year-over-year, the market continues to remain balanced with no significant new office towers being built in the downtown market in the last five-year period. Office space conversions (mostly from loft industrial space) continue to meet demand. The industrial market continues to show improvement as the second quarter saw positive absorption for the second consecutive quarter, boding well for the market.
The overall office vacancy rate in Halifax contracted during the second quarter from 9.7 per cent to 9.0 per cent, year-over-year, reflecting the decrease in newly constructed supply which was limited to 30,000 sq.ft. YTD compared to 122,500 sq.ft. at the same time in 2009. The suburban market continued to show strength over its downtown counterpart, as the vacancy rate decreased from 12.2 per cent to 8.6 per cent, year-over-year. The commercial real estate market remains among the most stable in the country supported by a broad-based economy including military, government and education sectors, with Halifax boasting one of the lowest unemployment rates in the country.
The latest office market report is out detailing the strong quarter we just experienced.
CBRE Waterloo Region Office MarketView - 2Q2010
Are there any statistics out there on the number of student apartments that have come online, say, since 2005 as compared to the student population increase in the same period?
I'm still waiting to check out the actual report but in the meantime newspapers are stating Waterloo Region (as reported by CBRE) had another uptick in our office market during 3Q2010.
Office rates ‘worst on market’
Last Updated: September 27, 2010 10:21am | By NORMAN DE BONO, THE LONDON FREE PRESS
http://www.lfpress.com/news/london/2.../15471416.html
...
“We’re the worst on the market,” said Peter Whatmore, vice-president of C.B. Richard Ellis, in London, the commercial agency that released the third quarter study of national commercial vacancy rates.
...
Waterloo Region’s overall vacancy rate decreased in the third quarter from 6.7 to 4.4%, year-over-year. Its industrial market decreased from 8.6 to 7.7%, year-over-year.
Office vacancy rates continue to climb
Garry Marr, Financial Post · Thursday, Sept. 23, 2010
...
Office vacancies rose in most major cities with smaller centres in Ontario such as Ottawa, London and the Waterloo region bucking the trend.
Soon time for a new office tower Downtown?
For as much as I'd like to see it, we still have to fill the Tannery and Breithaupt Block. Fortunately after that, there won't be too many abandoned warehouses around to convert.
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