'Rebuilding phase': Downtown office space vacancy rate still high

'Office space for lease' signs continue to be a common sight throughout Downtown Winnipeg three years after many workers went home during the first wave of the pandemic.

“Downtown Winnipeg is in a rebuilding phase from an office perspective,” Jonah Levine, North Atlas Commercial Real Estate partner and managing broker, told CTV News Friday.

Levine is the commercial leasing agent at the former Medical Arts building on Kennedy Street. It was remodelled into a mixed-use building shortly before the pandemic. And while residential units were scooped up, the challenge to fill offices remains.

"We’re not seeing 100 per cent return back to the office. That’s affecting office use throughout the city,” Levine said.

A new report by commercial real estate brokerage Coldwell Banker Richard Ellis (CBRE) suggests even more office space could be up for grabs in 2023. The report forecasts the downtown vacancy rate could jump from 15.7 per cent to 17.7 per cent by the end of the year.

Stats about the state of office spaces in Downtown Winnipeg. (Source: CBRE Research, CMHC, Oxford Economics 2023)

The projected hike is a by-product of insurance giant Wawanesa moving its headquarters to a new True North Square Tower - slated to be completed later this year. As a result, Wawanesa’s existing spaces will hit the market.

Levine says developers and landlords will need to do more to lure companies back downtown through attractive pricing and upgraded office spaces.

"Landlords who haven’t been stepping up to the plate with those sorts of investments need to consider ways in which they can broaden the appeal,” Levine explained.

Dayna Spiring, president and CEO of Economic Development Winnipeg, told CTV News it will also require enhancing areas around office buildings.

 “I think from a real estate perspective, we have to look at what amenities people want close to their work and close to downtown,” Spiring said.

She said developments like Truth North Square, as well as redesigned existing spaces coming back to the market, help address that need.

"I think there’s always an evolution. There’s always buildings that need to be refurbished or repurposed and things shift. That’s part of a growing economy."

In an email, a Wawanesa spokesperson told CTV News more than 1,300 employees will be working in the new True North Square tower.

“Our employees have told us they are excited to be downtown and work in our modern new building because of the dedicated collaboration spaces, employee wellness amenities, as well as our vibrant location at True North Square.”