Canada’s office vacancy rate rose from 8 per cent to 9.2 per cent during the 12-month period leading up to mid-year 2014. Despite the slight increase, the country’s vacancy rate is notably lower than its neighbour to the south (13.5 per cent) – but that may not last for long.

The statistics were released in Avison Young’s Mid-Year 2014 Canada, U.S. Office Market Report, which remains largely optimistic about both markets.  

“With improving economic conditions in the U.S. and Canada experiencing moderation, office markets across North America remain healthy – with strong indicators for downtown areas,” says Mark E. Rose, chair and CEO of Avison Young.

Demand for modern work spaces located near transit and mixed-use developments is in part driving this trend.

Of the 39 Canadian and American markets examined, 23 experienced vacancy rate decreases.Vacancies in the  United States are trending lower than in Canada, decreasing almost 1 per cent from the same time last year.

“Improving market fundamentals in the U.S. office sector are a welcome respite, and although the recovery has not been moving as quickly as we would like it to, metrics are trending in the right direction,” says Bill Argeropoulos, Avison Young’s vice president and director of research (Canada). “An improving U.S. economy and commercial real estate sector – in this case, the office sector – bodes well for Canada.”

Avison Young forecasts North America’s office markets will tighten during the remainder of the year and into 2015.

“Even markets that have seen slower recovery, negative absorption or oversupply present opportunities for our tenant and investor clients,” adds Rose.