Innovative and forward-thinking developers, landlords and contemporary tenants – from renters to coffee shops, salons and retail – are triggering changing trends in downtown Edmonton.
While constants of Edmonton’s downtown commercial real estate are factors like vacancy rates and absorption, commercial real estate is also a dynamic. Contemporary factors like lifestyle and work/life balance features, amenities, mixed use buildings and safety and security concerns are re-imagining downtown real estate.
The stats and trends show positivity and also caution.
According to Cory Wosnack, principal and managing director with Edmonton’s Avison Young, the columns of downtown vacancy and absorption figures are steady and stable, but impacted by changing workplace trends, the office space needs of government and other large Edmonton employers, as well as the trend of Edmonton’s increasing mixed use downtown space.
“In the past year, the overall office market vacancy rate has remained essentially unchanged,” he says. “While the downtown market increased marginally to 19.2 per cent and the suburban market improved slightly with a 15 per cent vacancy rate, Edmonton’s overall vacancy rate is 17.2 per cent.
“By the end of 2025, I think we will see a modest improvement in vacancy rates across Edmonton’s office market, due mostly to growth in many industries such as education, engineering, medical professionals and non-profit organizations.”
He cautions that the growth won’t likely translate directly into lower vacancy rates, because space will return to the market from government-related and other large tenants transacting for less space than they are currently leasing, while still accommodating the same number of employees.
A commercial real estate rule-of-thumb, and Avison Young’s most recent local office market report, show that absorption trends reverse as vacancy rates tick up.
Also, as of year-end 2024, Edmonton’s commercial market dynamics shifted. Five consecutive quarters of positive absorption gave way to 121,651 square feet of negative absorption. In downtown, government class A and B buildings experienced the largest vacancy increases, rising 3.25 and 2.64 per cent.
Mark Anderson, vice president at CBRE, says “We came out of a good year in 2024 with moderate levels of positive absorption of vacant office space. This year, we will have some more short-term challenges as office space is rationalized amongst some of Edmonton’s largest occupiers. This is something we have seen coming for the past few quarters, so it’s important to keep the narrative that the fundamentals of our office market are still strong.”
Edmonton’s commercial real estate professionals and downtown landlords are upbeat and agree that Edmonton’s downtown is being transformed, re-imagined and revitalized.
Puneeta McBryan, CEO of the Edmonton Downtown Business Association (EDBA) says, “We’ve held steady on office activity, and while we saw a slight increase in the overall office vacancy rate, we ended the year with net positive absorption for the first time since 2018. It’s safe to say that we’re past the impacts of the pandemic and are now seeing a ‘new normal’ level of economic activity, optimism and young entrepreneurship in our downtown, and there are some exciting things happening in retail leasing, which are driving revitalization and positive economic activity for downtown this year.”
While analyzing Edmonton’s downtown real estate trends and changes is a bit of a chicken-or-the-egg situation, McBryan points out that downtown tenant needs and expectations are driving many of the changes.
“Things that used to be ‘high end’/AA class amenities, like full gyms, bicycle parking, concierge-like property management services and well-appointed tenant lounges are now the table stakes for a successful office tower. Having attractive retail tenants like cafes in building podiums has also become a key ingredient to success.”
She mentions revitalization and increasing mixed use space as key downtown factors.
McBryan notes, “We did lose one last restaurant (Dalla Tavola Zenari) to pandemic financial challenges. They were sadly never able to recover, but on average we are hearing about 2-3 new businesses opening downtown for every one that closes.
“Many of the downtown buildings that are struggling with high vacancy have not kept up with tenant expectations and needs, because tenants have to do more than ever before to attract and entice their workers to come into the office. In response to what the market needs, we’re seeing significant and exciting investments in buildings like Connect Tower (former Phipps-McKinnon), Rice Howard Place (former Scotia Place), ATB Place coming soon, recently Bell Tower and others.”
She adds that mixed-use is a recurring theme in Edmonton as well as downtown real estate all over North America.
The former Phipps-McKinnon building, home to Bianco and Lui Chis, has now been renamed Connect Tower and Connect Residences. The top half of the tower remains as office. Leasing activity has been very positive for the building, and the lower half of the tower is becoming residential. Both Bianco and Lui Chis are staying in the building, and Junior Achievement also anchors the main floor with their new offices.
“It is an incredible project,” she says, “and I hope it will inspire other property owners to think more creatively about their assets and what the future of our downtown looks like.”
Although conversions to residential or mixed-use are not yet as popular as in some other downtown markets (like Calgary), McBryan is bullish that Edmonton will continue to see conversions pop up, with likely at least three conversions happening in the next five years.
“The fact is, there aren’t very many towers left in our downtown that have suitable floor plates and structures for conversions.”
LRT continues as a positive boost for Edmonton downtown’s revitalization, with The Valley Line making commuting much easier for thousands of downtown office, hospitality and service workers.
In Edmonton, as in many other downtown areas, safety, security and the look and feel “on the streets” is an issue which impacts commercial real estate. McBryan admits that Edmonton continues to have an unreasonably high level of homelessness, mental illness and addictions visible on downtown streets and other areas, and “it’s going to continue to hurt our local economy until all orders of government can come together to address these issues.”
Wosnack emphasizes the goal to create safer neighbourhoods, and that every city across North America has seen a substantial rise in office vacancy rates and heightened concern over public safety.
“While the problem was unfolding before COVID, the difference now is fewer employees working in office buildings, so downtowns feel hollower and more vulnerable about safety issues.”
He adds the positive, which other cities wish they had, “We will have a significant injection of new students attending our growing post secondary institutions over the next few years. By 2030, Edmonton will have 40,000 students and staff coming downtown every day. The growth of our post-secondary schools is the most underappreciated part of our downtown story.
“Bringing more people to downtown by way of education, residential and office employees will be the most effective way to improve the unsafe perception of this integral part of our city.”
