The national office space vacancy rate has increased to 11.7 per cent in first quarter of 2005 from 9.2 in first quarter according to a first quarter office space for rent vacancy rate report released today. All major markets examined reported increases in their vacancy rates.
Companies whose leases space are expiring in the next 12 months are in an advantageous position as softer demand for office space for rent in Montreal is prompting office space building owners to become retention focused and offer more flexible conditions, particularly in the B and C Class office buildings. Existing tenants with two or less years remaining on their leases are pushing landlords to renegotiate more competitive long-term leases for their office space with incentives.
Across Canada figures indicate that the leasing activity has slowed significantly the last two quarters A common trend reported in all markets examined is that negative absorption is causing downward pressure on rental rates.
The current political situation combined with a sluggish U.S. economy is expected to delay recovery in the commercial real estate sector to later this year or quite possibly the first quarter..
In Montreal, the vacancy rate rose to 12.1 per cent in first quarter up from 10.7 per cent in first quarter and edged up marginally by 0.5 percentage points from last quarter.

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