Signs of optimism return to downtown office market

· The Pulse
By Paul Cashman
in the Business Roundup

A major downtown office space broker is seeing an uptick in interest from prospective tenants as companies plan return-to-office strategies.

"Q2 2021 marks the first quarter since the pandemic began where the optimism we've seen is starting to manifest itself into tangible signs," says Avison Young's Edmonton quarterly office market report.

"Office touring activity and general inquiries have increased; each day more cars and bikes can be found in downtown parkades; and overall, people are starting to slowly return to their office spaces."

A Downtown Business Association survey indicates that about 75% of employers do not plan to change their office footprint while a handful are looking to increase their office space. "I can breathe a little easier than I did eight months ago," DBA executive director Puneeta McBryan told the Edmonton Journal. "Most of that worst-case scenario we were bracing for didn't happen."

Downtown's office vacancy rate edged up 0.4% in the second quarter, but when a 1% fall in Q1 is factored in, Avison Young sees stability in the market that points to more leases being signed in 2022.

Stantec Tower.

A six-floor block of the Stantec Tower is available for lease. (Avison Young - Edmonton)

Companies looking for downtown space have options ranging from Edmonton's signature office tower to 1980s-era boomtime buildings to updated historic structures. Floors 14 through 19 of the Stantec Tower are available as a sublease, Highfield Tower's 10 storeys are 100% vacant, and sitting half-empty are Scotia Place, Intact Building and Boardwalk/Revillion Building.

The top 15 buildings with the largest total vacancy mainly stretch along Jasper Avenue and cluster in the Ice District.

Based on experience in U.S. markets, Avison expects financial and professional service firms to be the first to return to the office, larger firms will be slower to bring back workers, and working hybrid models will have a permanent impact on employment but office-based work will remain dominant.

A challenge in attracting workers back downtown will be increased willingness by recruiters to offer flexible work arrangements, the Business Council of Alberta said in a report about the province's labour market.