Some of the restaurant’s old customers have returned, but only a small fraction, according to its owner. “It’s not even half the number we had,” said owner Shaosi Wang, who is cutting staff by a third, closing the restaurant some days and even considering leaving downtown. The picture is similar at Board N Brew Cafe, a board game cafe on 103rd Street, south of 100th Avenue. Graeme Ly, one of the cafe’s owners, said the drop in traffic was “pretty drastic” and he was also cutting staff and closing the cafe one day a week. “Even with government help, many of us are just surviving,” he said. Many local businesses had hoped workers would return downtown after two years of remote work, but vacancy rates in the core remain high and many commercial real estate experts told CBC News they don’t expect that to change anytime soon. Recent market reports from Colliers, CBRE and NAI Commercial Real Estate describe downtown Edmonton’s vacancy rate as high: between 11 and 22 per cent. According to CBRE data on Edmonton’s office market, several downtown landlords are offering “aggressive incentives,” such as early occupancy and higher tenant improvement allowances, to buildings with high vacancies. NAI Commercial’s second-quarter market report called the office vacancy rate “the thorn among Edmonton’s real estate roses,” particularly in the downtown area. The Edmonton Downtown Business Association predicted most workers would be back in the office by July, but reports from Colliers and NAI Commercial both said the return was not as quick as expected. “The mindset of the employee is that they really prefer at least some form of their work life to be remote, and I think the numbers speak to that,” said Chad Snow, president of NAI Commercial. Chad Snow is president of NAI Commercial Real Estate in Edmonton. (Trident photo) Jeff Simkin, senior vice president of CRBE in Edmonton, said there is a correlation between the size of companies and whether they offer hybrid work arrangements. Simkin said the city’s suburban market, which has been relatively strong, is characterized primarily by local and regional renters. “Downtown, there’s a greater concentration of national and global tenants, and many of these companies have a hybrid model,” he said.
Edmonton part of the national trend
Edmonton isn’t the only Canadian city where the suburban office market is outperforming the downtown. CRBE’s latest national office market report found that city centers are increasingly lagging behind suburban markets. “This is the second quarter in a row that the suburbs posted a lower national vacancy rate than city centers, which has never been seen before in the Canadian office market,” the report said. According to CRBE data, downtown vacancy rates were higher than suburban in Edmonton, Winnipeg, Halifax, London, Ottawa, Vancouver, Waterloo Region and Calgary.
Look forward
Some market watchers predict the vacancy rate will continue to rise in downtown Edmonton as employers who may have committed to 3- to 5-year leases during the pandemic reach the end of those contracts. Simkin said he expects more national tenants to implement a hybrid operating model, shrinking their downtown footprint, and some financial institutions may begin subleasing space in the core. Others see hopeful signs that the vacancy rate could move in the other direction. “I think we’re very close to where the bottom of the market is,” said Taylor Riar, senior associate in the office group at Colliers in Edmonton. “We’re starting to turn the corner based on the level of activity we’re seeing,” he said.
