A new report from CBRE shows that downtown Edmonton's office vacancy rate declined by nearly a full percentage point compared to the same period last year, even as restaurants and retail businesses continue to close and leave the core.
Office market shows improvement
Mark Anderson, vice president and managing director at CBRE Edmonton, described the second quarter as a big quarter, noting major transactions that had not been seen for many years. The sublet market also reached its lowest vacancy point in 15 years, which Anderson said is a sign of health because it indicates few tenants have surplus unused space to lease out.
This positive trend follows consecutive good news reports for the downtown office market, with vacancy rates hitting pre-pandemic levels for the first time at the end of last year. In a short period, federal and provincial government workers returned to the office full-time, while major institutions such as National Bank, Atco, ATB, and AIMCo committed to working out of the core.
Retail and restaurant struggles persist
Despite the office market gains, many retail and restaurant businesses are struggling. In recent months, KB & Co, Playwright, Khazana, and Sunterra Market inside Commerce Place have announced plans to leave downtown. Operators have cited rising food and labour costs, changing downtown dynamics, and obstructive construction that leads to less foot traffic.
Anderson noted that the bulk of office workers are concentrated in a relatively small geographic area around the Ice District and City Centre Mall. Within that area, business closures are less common. “The problem is our downtown is so gosh darn big,” Anderson said. However, he views this narrowing focus as potentially positive: “What’s really promising is it looks like the cup is filling up, and it’s about to start spilling over.”
City workers could boost vibrancy
Anderson suggested that the City of Edmonton could help boost downtown traffic by filling its leased but empty office spaces, such as those in Edmonton Tower. Bringing city workers back to in-office full-time would have a massive impact on vibrancy, he said.
