A slide in demand for office space and rising vacancy rates during the economic downturn meant Vancouver's central business district saw Canada's largest decrease in average office rents in 2009, says a new report.
In its Office Space Across the World report, commercial realtor Cushman & Wakefield LePage said downtown Vancouver's average office rent declined 26 per cent to $31.38 per square foot in 2009 compared with 2008.
"Weak demand and rising vacancy rates forced rents down in three of our major markets," Pierre Bergevin, Cushman & Wakefield LePage's CEO said in a news release.
Toronto and Calgary, cities with big new office developments opened in recent months, had average central-business-district rents decline 24 per cent to $29.61 and $19.94 per square foot respectively.
"Vancouver has stabilized and rents are unlikely to drop much further," Bergevin said.
Downtown Vancouver, however, also has little in the way of supply being added to the market, which keeps its vacancy rate relatively low compared with other cities, said Shawna Rogowski, director of research at Colliers International in Vancouver.
Office rents did drop during the market downturn of 2009, Rogowski said, but hesitated to estimate how deep the decline was since there was less leasing activity during the period.
Cushman & Wakefield LePage said the world's major centres "suffered an unprecedented fall in demand for office space," which led to the first significant worldwide drop in prime office rents since 2003.
