Barrie’s office space vacancy rate is on the rise.
Figures from the last quarter of 2012 show empty office space at almost 7.65%, compared to nearly 6.9% in the second quarter and 6.6% in last year’s first quarter.
Broker Linda Loftus, of Sutton Group Incentive Realty, prepared the report and says it shows who has the upper-hand in this marketplace.
“The message is more for tenants. It’s a tenant’s market,” she said. “You can drive a pretty good deal.”
Loftus says these numbers show a trend.
“Rents are being driven down by oversupply and increases in operating expenses,” she said. “In many cases operating expenses are exceeding or equal to rent.”
Loftus says operating costs float and are adjusted annually, but any underestimations can be recovered from tenants.
She says for markets like Barrie, office inventory can be an important economic indicator.
“You need to analyze where the new vacancies are coming from and why,” Loftus said.
A higher office vacancy rate could mean new landlords, for example, might be more aggressive with renewals — forcing tenants to review their options, she said.
Or tenants could decide it’s better to own property because of lower interest rates.
Hany Kirolos, Barrie’s economic development director, says its office space vacancy rate can be taken two ways as an indicator.
“One, we have a challenge because of the high vacancies which may reduce new development, and two, is the reverse,” he said.
“(It) provides for good inventory that can be a plug and play for those that may need to relocate to Barrie quickly.”
Loftus says office inventory is also an economic indicator if it’s a result of company closings, directly or indirectly.
She says when office inventory increases, it’s an opportunity for business to expand — because of the cost advantage.
“Landlords offer more and take less when looking for new tenants, or renewals,” she said.
Loftus says that while landlords and tenants should be aware of office inventory, not all are and they don’t always monitor the markets.
“Since the majority of office buildings are owned (some partially) or managed by companies that have principles as realtors, it is not information that would be shared with prospective tenants — as it would disadvantage earnings,” she said.
“Most corporate clients are aware of these blurred loyalties and will generally engage a real estate firm to represent their interests by surveying the market, making recommendations and negotiating an acceptable lease agreement.”
Kirolos says his office does look at ways to reduce Barrie’s office space vacancy rate.
“(The) biggest two factors that have always been in play are, one, ensuring that we’re maintaining investment attraction and relocation activities to our best prospects in southern Ontario and beyond,” he said, “and two, synchronizing our attraction activities with those that hold the lands/vacancies and their brokers.”
The survey includes ‘Class A’ office product, which Loftus says is a very loose definition in Barrie but generally means high-rise or multi-storey and/or elevator accessed.
‘Class B’ means flexible industrial properties, as well as home conversions to office, while ‘Class C’ is second storey downtown and excess office space in industrial buildings.
Loftus says all figures gathered in her report are from the Barrie Multiple Listing Service (MLS) system. They come from 29 city properties on Bayfield Street, Bayview Drive, Bell Farm Road, Collier Street, Cundles Road, Dunlop Street East, Essa Road, Ferris Lane, High Street, Huronia Road, Lakeshore Drive, Penetang Street, Quarry Ridge Road, Simcoe Street, Sperling Drive and Wellington Street.
Her report details each building’s total area, vacancy, condition of available space, the rent being asked for, operating costs and taxes, parking, neighbours and even whether there are elevators and sprinkler systems.
(photo: The amount of vacant office space appears to be growing in Barrie, according to a recent report. Figures from the last quarter show empty office space at 7.65%, compared to nearly 6.9% in the second quarter. MARK WANZEL PHOTO
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