Edmonton office market report

 

01. Positive absorption continues

The Edmonton office market recorded its fourth consecutive quarter of positive absorption, amounting to 108,920 sf overall. In contrast, Downtown posted negative absorption of 25,911 sf, as new vacancies at Compass Place, Stantec Tower, Intact Building, and Empire Building outweighed positive absorption. The suburban market performed more strongly, with 134,831 sf of positive absorption, led by Summerside, West End, and South Side.

Significant contributions included 44,000 sf at Commerce South Office Park Building A and E, 27,000 sf at West Campus, and 25,000 sf at Ellwood Business Centre. Summerside, West End, and South Side saw vacancy rates drop to 3%, 16.5%, and 14.8%. However, vacancy rates rose in Whyte Ave and 118 Ave & Kingsway, to 22.4% and 19.8%, respectively. Meanwhile, the Financial District's vacancy rate sits at 18.2%, with an increase in class B vacancy due to the partial residential conversion of the Phipps McKinnon Building, which removed 95,000 sf of office space from the market.
 

02. Local investors drive Edmonton market

In the first half of 2024, Edmonton's office market saw a significant uptick in activity, driven by local investors. Q1 2024 witnessed five sales transactions totaling $12.6 million, while Q2 2024 saw an impressive rise of 11 sales amounting to $86 million. Notably, six office buildings over 60,000 sf were acquired by local investors, signaling their confidence in Edmonton's future, despite high vacancy rates and national concerns about work from home trends.

Local investors, familiar with Edmonton's market dynamics, committed $98.6 million in 2024, marking a strategic shift as national and institutional investors divested from the region. This transition reflects a growing belief in Edmonton’s economic potential, with local investors capitalizing on opportunities passed up by larger funds.

 

03. Limited development activity amid high vacancy rates

Development activity in Edmonton's office market remains limited due to high construction costs and elevated vacancy rates. The only ongoing project is Ever Square, a mixed-use development on Calgary Trail and 46 Avenue, which will add 84,000 sf of gross rentable office space. This cautious approach to new developments reflects broader economic conditions and the market's current oversupply of office space. Despite these challenges, several projects are in the pre-leasing phase, suggesting potential future growth as market conditions stabilize.