As downtown booms, will Edmonton have too much office space?
Watch above: With three major office towers under development for downtown Edmonton, are there concerns about oversaturating the market? Vinesh Pratap gets the answer.
EDMONTON – The 62-storey Stantec tower is the latest in a number of major commercial developments in downtown Edmonton. So, with the construction boom, is there any concern of too much supply and not enough demand?
“Thinking about the market today and worrying about trying to keep it exactly the same is not a great city-building strategy,” said Mayor Don Iveson on Tuesday.
“You have to make some bold plays. This is one.”
“I don’t think it’s going to be a ton of extra space,” Iveson said.
“There is some vacancy downtown, but I think that’s going to keep the price competitive and I think that is our opportunity to attract business from the suburbs so we have more jobs downtown, and it’s also our opportunity to start to – potentially, competitively – make a good proposition to companies in other jurisdictions who want to take advantage of Alberta’s low taxes and the business friendly environment and the great quality of life.”
Cory Wosnack, principal with Avison Young, doesn’t believe the new Stantec tower will lead to much vacancy.
“The space that Stantec is vacating is in a part of the downtown area that appeals to a slightly different marketplace than what the new tower will be sourcing for new tenants,” he explained.
There are three new office towers planned for the downtown core. The Kelly Ramsey Building – that will add nearly 600,000 square feet of office space when it’s completed in 2016 – and the 27-storey City of Edmonton building are currently under construction. The new Stantec tower is scheduled to be finished in 2018.
The EPCOR tower, which opened several years ago, was the first new office tower downtown in some time. It currently has a vacancy rate of about 25 per cent.
Qualico’s Ken Cantor – whose company is behind the EPCOR building – is not worried about a glut of office space.
“I’m not. I’m excited about all three of them. All three of them are quality projects with quality tenants.
“But there’s not an awful lot of space that’s going to be delivered to the market in the near future.”
“I don’t have great qualms about it,” echoed Iveson. “There are different views in the market. Some people think we’re going to be way over supplied. Those are people who have space they need to lease and they’re nervous and I get that, but they need to make some reinvestments and they need to compete for that space.
“There are those who are complaining about it and those who are adapting to the market.”
Cantor believes employee retention will play a big role in tenants looking at the new commercial space.
“It’s going to become a more and more competitive environment and one of the ways to compete with that is A) to be downtown and B) to be occupying the kind of space that has the amenities and features that are important to the workforce.”
Wosnack says the next few years will be exciting times, especially for tenants, who he says are the ones driving the market.
“It’s the users of the marketplace that are demanding for new inventory, better office space, and tenants now have a choice,” he said.
“The changes that are happening, led by EAD, is a significant indicator that Edmonton is growing up,” said Wosnack.
“Edmonton is now a progressive city that has a fresh, new appeal to a younger generation of workers.”
© Shaw Media, 2014