How Tight is the Ottawa Commercial Real Estate Market Today?
Consider some of the latest findings in RE/MAX Canada’s latest 2023 commercial real estate market report: vacancy rates are stubbornly low, industrial sales and leasing remain tight, and land sales are fetching $1 million per acre. These figures are being seen in a wide range of sectors, too, from manufacturing to prime office spaces.
The growing demand for commercial property has been largely driven by government institutions, the rise of technology firms, and increased competition for limited land opportunities. This is in addition to the steady demand for manufacturing, warehousing, and distribution facilities.
What makes Ottawa a compelling opportunity in commercial real estate is the starting price point, despite scarce supply levels. Commercial investors have seen affordability and reasonable prices, be it small official buildings or industrial sites. Overall, the demand for commercial real estate in Ottawa will extend to retail spaces, office locations, and industrial properties.
It is essential to understand that Ottawa has always been a lucrative business area as it is a stable city with excellent infrastructure and a diverse economy. Because it is the nation’s capital, there is an immense presence of state-owned institutions and a robust climate for tech firms, educational organizations, research centres, and much more.
Meanwhile, in Ottawa’s downtown core, particularly in the central business district, there is a prime location for office spaces, attracting both public and private sector tenants. Moreover, some suburban areas in Ottawa are popular among technology entities – start-ups – and research facilities. In the last couple of years, industry observers have noted that there has been an increase in co-working spaces as more and more companies are choosing remote or hybrid work models. However, despite the rise in remote and hybrid work, office real estate continues to have an important purpose and value for most businesses, and vacancy rates remain low in Ottawa’s commercial real estate market.
A recent Altus Group study revealed that the availability rate for office space stood at 12.5 percent in the first quarter of 2023. While this was up from the same time a year ago, these are still some of the lowest levels in the entire Canadian commercial real estate market.
Industrial Real Estate in Ottawa
Ottawa is strategically located and maintains a strong transportation system. This is why industrial real estate is also in high demand in Ottawa, and the presence of warehouses, distribution centres, and manufacturing facilities continues to increase.
A broad array of industry reports highlights that industrial space stock is becoming increasingly scarce. The national availability overall has hit a record low. Ottawa is no different, as only Calgary and Edmonton are the exceptions. The data show a high demand for industrial, multi-unit residential, and farmland in the first quarter of 2022.
Recent research has also revealed that Ottawa is one of Canada’s most preferred commercial real estate markets today, behind only Toronto and Vancouver. This is true for industrial land, food-anchored retail strips, and multi-purpose locations in Ottawa’s suburbs.
Consider this statistic: Industrial real estate reported an investment volume of $846 million. This is an increase of 240 per cent from 2021. The industrial vacancy rate is around 2.6 per cent, and demand for this asset is expected to continue to increase as supply is scarce.
It has been estimated that the Aqueduct District, situated within LeBreton Flats fronting the Ottawa River, will be ground zero for development in Ottawa over the next decade.
Is the Future of the Ottawa Commercial Real Estate Bright?
Ultimately, does the Ottawa commercial real estate market have a bright future?
Yes, many will say that Ottawa possesses an advantage because it is Canada’s capital. But it also maintains a population north of one million, it is the fourth-largest municipality, and the economy is vibrant, resulting in a significant portion of the public with a high median household income. Surprisingly, Ottawa has a large land area, larger than many major urban centres combined.
Ottawa is a great place to live and work and has an excellent economic outlook. This is why businesses want to invest in this city, and more start-ups want to establish themselves here.
Health care. Education. Public administration. Science. Technical services. Retail trade. Accommodation and food services. Businesses in every industry continue to show healthy growth in the region. Demand for commercial real estate in Ottawa is projected to surge in the coming years. However, supply will fail to keep up, resulting in scarcity across the commercial real estate market in the nation’s capital.
Source: Altus Group
