Cushman & Wakefield Winnipeg
Real Estate Agency
|||260 St Mary Ave, Winnipeg, MB R3C 0M6, Canada|
The Canadian unemployment rate dropped two-tenths of a percent from 6.9% last quarter to 6.7% in Q1 2017. Growth in Manitoba’s economy is forecasted to reach 2.0% in 2017. (Conference Board of Canada).
New office developments in the Central Business District are impacting the market in a number of ways. Some landlords of existing class A and class B product are already undertaking a proactive approach to both the retention and attraction of tenants by upgrading their properties. Landlords that have not made this investment are at greater risk of losing tenants and are faced with increasing vacancy rates. Despite the rising uncertainty in the market, rental rates have remained relatively stable. Some landlords are offering larger than normal leasehold improvement allowances as they compete for tenants, recognizing that relocation costs can be a major deterrent for companies.
The Suburban market has been quiet as vacancy rates have remained low and the inventory has remained static. As a result of these market conditions, net rental rates are increasing at a quicker pace compared to the Central Business District.
The Canadian unemployment rate dropped one-tenth of a percent from 7.0% last quarter to 6.9% in Q4. Winnipeg’s labour force grew in Q4 by just under 1000 individuals at the same time as more jobs were created, resulting in a diminishing unemployment rate from last quarter to 6.1%. GDP growth in Manitoba continues to be positive and grew 1.7% in 2016. Economic growth will continue to increase through 2017 at an estimated rate of 2%, due to Manitoba’s booming power and agriculture sectors. Manitoba will lead the way along with British Columbia, Ontario and Prince Edward Island to power Canada’s estimated 1.7% economic growth through 2017.
As True North Square continues on track to be completed, SkyCity is close to breaking ground, and Osborne Place continues to be developed, the Winnipeg Class A market is looking more and more appealing to tenants despite the upward trend of asking rental rates. Class A Central Business District (CBD) vacancy increased by one-tenth of a percentage point to reach 4.3%, with a corresponding negative absorption total of 3,449 square feet (sf).
In the overall office market, there wasn’t much movement this quarter aside from a large amount of space (41,159 square feet) absorbed in Class C Suburban market. Overall vacancy in the CBD remains the same as last quarter at 7.8% and overall vacancy in the whole office market decreased to 7.4%, down six-tenths of a percentage point from Q3. Click here to download the full report
The Canadian unemployment rate rose two-tenths of a percent from 6.8% last quarter to 7.0% in Q3. Winnipeg’s labour force grew more quickly than jobs were created in Q3. This resulted in the rise of Winnipeg’s unemployment one-tenth of a percent from last quarter to 6.4%. GDP growth in Manitoba continues to be positive and is anticipated to grow at 2.1% in 2016. The first 100 day session of our new Conservative government concluded in Q3. Some accomplishments from the first 100 days include a $100M reduction in provincial deficit and a rise in the basic personal tax exemption, all without raising or expanding provincial taxes. The impact of these accomplishments are likely to add to the province’s already stable economic environment.
There is never ending chatter surrounding True North Square, SkyCity, and Osborne Place as these projects promise to deliver a new caliber of class A space to Winnipeg and will likely push asking rental rates upwards. Progress is taking place on recently announced capital projects for existing buildings. The acelift of 360 Main St. is about a third complete and other projects have already taken off as well including 201 Portage Ave., 1 Lombard Ave., 330 Portage Ave., and 330 St. Mary Ave. The cost of these projects will most certainly put pressure on overall gross rents. Class A Central Business District (CBD) vacancy decreased by a massive one and one half percentage points to reach 4.2%, with a corresponding absorption total of 49,386 square feet (sf); the result of a 15,570 sf tenant expansion in 360 Main Street and more than one new head lease in 1 Lombard Place decreasing the vacancy by 29,704 sf.
In the CBD, there seemed to be a lot of movement which resulted in class C seeing a large negative absorption to balance class A’s large positive absorption. Overall vacancy in the CBD is sitting three-tenths of a percent less than it was last quarter at 7.8%. It seems everyone wants to be downtown. Office space seems to be a hot commodity with overall vacancy in Winnipeg, in both CBD and Suburban markets combined, sitting at an even 8%, better than last quarter by two-tenths of a percent.
The Canadian unemployment rate dropped half a percent from 7.3% last quarter to 6.8% in Q2. This is also the trend in Winnipeg as unemployment dipped one-tenth of a percentage point from last quarter to 6.3% as approximately 1,000 new jobs were created. GDP growth in Manitoba is positive and is anticipated to grow at 2.3% in 2016.
There was a new provincial government elected this past spring and a new Conservative policy is on the horizon – the impact of which will most likely shore up the province’s already stable economic environment.
There is significant buzz in Winnipeg surrounding True North Square, SkyCity, and Osborne Place as these projects promise to deliver a new caliber of class A space to Winnipeg and will likely push asking rental rates upwards. Landlords of existing class A&B inventory have recently announced capital projects for assets including 360 Main St., 201 Portage Ave., 1 Lombard Ave., 330 Portage Ave., and 330 St. Mary Ave. The cost of these projects will most certainly put pressure on overall gross rents. Class A Central Business District (CBD) vacancy increased by over a percentage point to reach 5.9%, with a corresponding negative absorption total of 35,232 square feet (sf); the result of downsizing of the Truth and Reconciliation Program at 360 Main Street. Despite this, net rental rates climbed slightly reaching $19.95 per square foot (psf) in Q2.
In the CBD, the combined absorption of class B&C markets was 95,495 sf, with both class B&C vacancy declining to single digits this quarter; reaching 8.9% and 9.1% respectively. The most notable transaction this quarter was the lease of 21,829 sf by Public Works (PWGSC) at 400 St. Mary Avenue.
The capital markets sector saw activity in Winnipeg’s CBD with the sale of 400 St. Mary Avenue and 444 St. Mary Avenue to the Alberta Teachers Pension Plan, and the sale of 240 Graham Avenue to Great West Life.