TORONTO - The amount of empty office space across Canada continued to rise in the third quarter due to higher unemployment in white-collar industries and excess inventory in some cities, a new report shows.
Vacancy rates for commercial real estate are expected to keep rising "well into 2010" as the country works through the impact of the recent recession, CB Richard Ellis Ltd. said in report released Monday.
Vacancy rates rose for the third straight quarter to an average of 9.4 per cent, up from 6.3 per cent for the same time last year, said the real estate services firm.
"Limited new job creation in Canada's 'white-collar' industries and the addition of new inventory in two of Canada's three largest office markets are cited as reasons for the increase," according to the National Office and Industrial Trends Third Quarter Report.
Commercial vacancy rates rose most noticeably Calgary, Toronto and Vancouver, the report shows.
Calgary's third quarter vacancy rate jumped to 13.1 per cent, from 4.7 per cent last year, due to the impacts of a slowdown in the oil and gas industry.
"The city's oil and gas industry and commercial market remained inexorably linked, as players both large and small continue to recognize that even Calgary has not been immune to the country's new economic reality," the report states.
In Toronto, the commercial vacancy rate rose to 9.1 per cent from 6.6 per cent last year. The vacancy rate in downtown Toronto is expected to climb further in the coming quarter as space becomes available in newly constructed office towers.
In Vancouver, vacancy rates climbed to 8.9 per cent from 5.4 per cent for the same time last year. The report said Vancouver is one of the more stable markets in the country thanks to limited new development.
Montreal's vacancy rate rose to 10.3 per cent from 8.3 per cent last year, while Halifax's rose to 10.2 per cent from 8.4 per cent.
Vacancy rates also rose in the country's smaller office markets, specifically in suburban areas, but at a lesser rate, the report shows.
It said cities with government office space also saw more stability in their commercial real estate markets.
Ottawa had the lowest overall third quarter vacancy rate in the country of 5.8 per cent compared to five per cent for the same time last year, while Winnipeg's rate came in at 7.5 per cent up from 4.8 per cent last year.
The overall vacancy rate in the Waterloo Region, home to such technology firms as Research in Motion (TSX:RIM), edged up slightly to 6.7 per cent from 6.4 per cent last year.
The report predicts vacancy rates to keep rising in the fourth quarter and into 2010, "as Canada continues to grind its way out of the recession."