Landlords and businesses are displaying remarkable creativity when it comes to commercial spaces.
Across Canada, commercial vacancy rates have been steadily increasing, reaching levels unseen in the past decade. In Québec City, the Central Business District witnessed a substantial surge, with the vacancy rate climbing to 14.4% in Q2 2023. This was primarily due to the addition of vacant space in Class B buildings in Saint-Roch and Old Québec, as well as in Class A buildings in the downtown fringe area. Meanwhile, in the Greater Montréal Area, the vacancy rate hit 17.4%, setting a new record in the downtown area, with sublet availability accounting for 16.1% of all vacant space.
Nationally, the trend is driven by a decline in office space rentals in Downtown Class B properties, compelling organizations to seek alternatives in Suburban Class A properties within secondary markets.
In response to these shifting dynamics, landlords and businesses are adopting innovative approaches:
- Turnkey Premises: Landlords are offering fully equipped, ready-to-use spaces to attract tenants. These turnkey solutions simplify the leasing process and enhance the appeal of commercial properties.
- Strategic Location Shifts: Businesses are moving away from traditional downtown cores to opt for high-quality office buildings with excellent amenities. This strategic shift minimizes commute times and fosters a more conducive environment for employees to return to the office.
- New Business Models: Landlords are exploring fresh business models such as collaborative workspaces to repurpose unoccupied office buildings. These models not only fill empty spaces but also cater to the changing needs of modern businesses.
Jean Richard, Executive Vice President at CDNGLOBAL Québec, a commercial real estate firm, underscores the profound impact of the hybrid working model on Québec City’s office real estate market. Vacancy rates in the city have nearly tripled compared to the ten-year average. This shift has prompted a reevaluation of traditional approaches and encouraged stakeholders to embrace creative solutions.
As the commercial real estate landscape continues to evolve, landlords and businesses alike are demonstrating their adaptability by embracing innovative strategies to make the most of available commercial spaces.
