Edmonton office market report

01. Second consecutive quarter of negative absorption

Negative absorption has continued in the Greater Edmonton area into Q1, but downward pressure has decreased. The Edmonton office market is currently sitting at 56,920 sf of negative absorption, an improvement to the negative absorption of 121,500 sf seen in Q4 2024.
The Downtown sector experienced an overall vacancy increase of 36 basis points (bps) with negative absorption of 54,850 sf. Financial B and Government C class saw the only reduction in vacancy for the sector, with 4 bps and 23 bps, respectively.

The Suburban sector saw little movement from Q4 2024 to Q1 2025, with a negative absorption of 2,070 sf, and vacancies decreasing by 34 bps quarter-over- quarter (QoQ). Eastgate saw the largest vacancy decrease in suburban space of 90 bps. Suburban office spaces are showcasing resilience, as tenants continue to favor relatively cheaper alternatives.

02. Economic uncertainty likely leading to increased scrutiny

Economic instability in North American markets has created a cautious environment across the nation. The current and unprecedented context may cause trepidation in the office landscape, creating prudency for immediate leasing and sale decisions. The Edmonton office sector is no exception. 

This cautious approach stems from concerns around fluctuating market conditions, resulting in businesses postponing commitments to new leases, expansions or sales. The office sector may continue to steady until the state of the economy becomes more predictable. Uncertainty around US tariffs has created difficulty for accurate economic forecasts, prompting stakeholders to adopt a wait-and-see strategy.
Office space may stand to be more resilient against tariffs than other Edmonton sectors. Private investors with in-depth local market knowledge continue to capitalize in future quarters, especially if market conditions stabilize.

03. Private capital leads purchasing, investment sales fall

Institutional capital has been showing hesitancy to participate in the office sector in Alberta, providing private investors opportunities to seize high quality assets, with long term investment potential in mind.

While institutions reassess, private investors continue to account for the majority of office transactions, as seen in the previous quarter. Reported investment sales fell from $102 million in Q4 2024 to $22 million in Q1 2025. Owner/user sales notably increased to $5.2 million, the highest since Q2 2024.

The Bank of Canada’s seven consecutive rate cuts since 2022 gave hope for improving financing conditions, until April 16th, when the Bank of Canada announced an interest rate hold at 2.75%, with the aim to maintain stability, amidst prevailing economic uncertainty.