Alberta's booming economy has driven office rents in Calgary to the highest level in Canada, just ahead of Toronto's, but far below the sky-high rents being paid in London, England, a global rental market survey says.
The survey — by the commercial real estate firm CB Richard Ellis — found that office space in the west end of London costs almost $329 US a square foot per year, almost double the $181 US a square foot paid in the second-place city — Mumbai, India.
| Most expensive office rents (Q3 2007) | |
|---|---|
| City | US$/sq. ft./year |
| 1. London (West End) | $328.91 |
| 2. Mumbai | $189.51 |
| 3. London (City) | $180.80 |
| 4. Moscow | $180.78 |
| 5. Tokyo (Inner Central) | $178.61 |
| 34. Calgary | $64.44 |
| 35. Toronto | $63.78 |
| 46. New York | $53.47 |
| 50. Amsterdam | $52.15 |
| (Source: CB Richard Ellis) | |
London's "City" financial district, Moscow, and central Tokyo rounded out the top five most expensive cities for office space, with rents not far behind Mumbai's.
Calgary's average office rent in the third quarter of 2007 was $64.44 US per square foot per year. That placed it first among Canadian cities and 34th in the world, just ahead of Toronto's 35th place ranking. Typical rents for new office leases in Toronto were $63.78 US per square foot.
No other Canadian city made it into the top 50.
"Demand is strongest in western Canada, as reflected in the tight 5.0 per cent vacancy rate, compared to eastern Canada's 7.9 per cent," according to the survey.
"The demand for space continues to be fuelled by financial and business services firms, and the shortage of space in the west has caused rental rates to increase exponentially over the past 12 months," it said.
Calgary now accounts for 8.3 million square feet, or just over half, of the 16.4 million square feet of office buildings now under construction in Canada. But the real estate firm warns that Calgary's office market has weakened in the past six months as gas prices fell.
"Additionally, the federal government trust reversal and the uncertainty surrounding energy royalties in Alberta are also contributing to a change in downtown tenants' need for space," the survey said.
It says decreased demand is expected to continue into 2008.
Rents in Edmonton, while not ranking among the worlds' most expensive, are rising faster than in most cities. Average office rents were 43.3 per cent higher than they they were in the 2006 survey — the ninth fastest increase in the world.
When Canadian dollars are used, Edmonton's annual increase jumped to 60.7 per cent — the fastest rise among any city in North America.
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