The ongoing economic downturn continued to exert pressure on Landlords and Tenants, leading to several store and restaurant closures. Therein, however, lay opportunity for others to take advantage of decreasing market rental rates, which led to the opening of multiple new franchise locations.
Investor sentiment regarding the Calgary market showed signs of renewed confidence as 2016 progressed.
The Upper Tollway Sub-Market has seen a spike in Class A vacancy from 18.1% in Q3 of 2015, to 22.3% in Q3 of 2016. Although full-service rents continue to climb, prices have slowly began to mellow out as rates increased from $33.53 PSF to $34.57 PSF during the same time frame. The most alarming of the Q3 statistics is the fact that Class A total net absorption for Q3 2016 was -77,093 SF, with over 200,000 SF of new sublet space arriving to market just this quarter.
The Richardson/Plano Sub-Market has shown an decrease in the direct Class A vacancy from 15.5% in the third quarter of 2016 to 12.3% at the beginning of the third quarter of 2016. Meanwhile, direct weighted average full-service rents increased from $24.16 to $26.12 per square foot during the same time. Class A net absorption in the past twelve months sits at 1,109,572 square feet. Class B vacancy remained relatively stable and sits at 20.9% with full-service rental rates jumping from $19.08 per square foot to $22.48 per square foot.
The Preston Center Sub-Market has seen an increase in the Class A vacancy from 6.6% at the end of third quarter 2015 to 6.8% at the end of the second quarter 2016. Average full-service rental rates of Class A space increased per square foot, from $37.40 to $37.67 during the same timeframe. Class A direct net absorption was at 51,053 square feet for the third quarter of 2016.