Office buildings and shopping centres face increased vacancies, decreased revenues from COVID-19 fallout

One way is the only way as COVID-19 social distancing measures/signs at West Edmonton Mall are very noticeable to aid in reopening in Edmonton, June 22, 2020. Ed Kaiser/Postmedia

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Even before the pandemic emptied downtown of workers, Edmonton’s office space vacancy was at an all time high, but the current surge of working from home is unlikely to disrupt the market in the near term, some analysts say.

“We’ve seen a lot of office vacancies, but for the most part corporate offices have higher margins, more retained earnings, and they’ve been in a better position to weather the storm than retail has,” said Chad Griffiths, a commercial real estate broker with NAI Commercial.

Just before physical distancing orders were issued in mid-March, Edmonton’s class-A office space, considered the newest and best space, had a vacancy rate of 17.9 per cent, while class-B space had a vacancy rate of 20.5 per cent, according to a Jones Lang LaSalle report. Downtown, the rate was a historically high 19.1 per cent.

Then during the second quarter as work from home policies were adopted widely and businesses ordered closed, many tenants whose leases expire this year negotiated extensions, suggesting that the market is stable for the moment. Though the downtown vacancy rate did rise to 19.7 per cent, according to a CBRE report at the end of June. The national average is 10.8 per cent.

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