Waterloo and Wellington Region recorded a quarterly increase in sublease space to its highest point this year. Despite this, sublease vacancy is not unusually high in comparison to recent years, and currently accounts for 5.5% of overall vacancy in the market. Sublease space is expected to further increase in 2021 as multiple significant tenants finalize their marketing of space.
For the first time in eight quarters, the Region introduced new office supply by way of three buildings totaling 240,000 sq. ft. The completed buildings, which all broke ground well in advance of the economic recession, had limited pre-leasing at the time of delivery, with some deals completed pre-COVID.
Net rental rates remain strong as landlords have held firm with their posted asking rates. The overall net rental rate saw a $0.51 per sq. ft. increase quarter-over-quarter to $14.71 per sq. ft. The increase in the overall rental rate can partly be attributed to better product coming on the market from the previous quarter, as Class A vacancy recorded a 210 basis points (bps) increase to 6.2%. Overall, the market recorded an 80 bps quarter-over-quarter increase in vacancy to 7.7%.