Edmonton office market report

Momentum has accelerated in Q1 2024

Due to vibrant leasing activity in the Downtown and the suburban areas, the Edmonton market has achieved a notable three-quarter streak of positive absorption.

 

Conditions are improving in Downtown Edmonton

The downtown Edmonton vacancy rate has decreased by 0.3% from the last quarter, driven by significant positive absorption in the Government District, which represents 65,797 square feet (sf) of space. Robust activity was observed in Energy Square and One Twelve Campus, with M2 Engineering concluding a new agreement in the two-tower complex.

Conversely, activity in the Financial submarket remained relatively static, recording a negative absorption of 12,114 sf. Nonetheless, the overall vacancy in Downtown Edmonton has continued its gradual decline, currently standing at 19.8%.

Over the last two quarters, the Downtown area has recorded a positive absorption of 157,634 sf, which helped push the Downtown vacancy rate below the 20% mark.
 

Positive absorption in the southern part of the city

The suburban markets observed a positive absorption of 35,741 sf, most of which is concentrated in the South Side and Windermere markets in the southern part of the city. This growth was propelled by significant leasing activity, including the conclusion of AceraInsurance’s lease at 5103 Windermere Boulevard, and Weyerhaeuser’s lease at Carrington Business Campus. As a result, the overall suburban vacancy declined to 17.2%, dropping by 0.2% since Q4 2023.

Suburban tenants, especially those with office spaces of 10,000 sf or larger, tend to be loyal to their existing submarkets, preferring to relocate and expand within familiar neighborhoods. This preference is influenced by several key factors, including the convenience of commuting, proximity to amenities, retail options and parking. This trend has a notable impact on the broader suburban office space market, which impacts availability across the city.

Three quarters of positive absorption

The Edmonton market recorded a three-quarter streak of positive absorption, amounting to 394,437 sf. This pushed the overall vacancy rate to drop by 0.3%, while the Downtown and suburban vacancy rates decreased by 0.3% and 0.2%respectively. Some submarkets still experienced an uptick in vacancy, including the Financial district, where it increased by 1% for trophy assets, and 124 Street, where it rose by 1.3%.

This trend is supported by strong leasing activity in Downtown and suburban markets, which can cater to a diverse range of tenant needs. Economically, Edmonton is well positioned to leverage Alberta’s ongoing growth, indicating a promising outlook for market expansion and vitality.

As vacancy tightens, tenants looking for space may be surprised by the scarcity of options available within specific criteria (location, asset class, contiguous floorplate, etc.), especially in suburban areas and class AAA office towers Downtown.