Kelowna could be building an office space surplus problem - InfoNews

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Kelowna could be building an office space surplus problem

An artist's rendering of the proposed Landmark 7 office tower in Kelowna.
Image Credit: SUBMITTED/Al Stober Construction
April 10, 2019 - 2:00 PM

KELOWNA - If you build it, will they come?

Al Stober Construction certainly hopes so. Last December the company announced its intention to build a new office tower in downtown Kelowna. The Landmark 7 will have 23 floors of office space, along with retail stores, a fitness centre and a 350-person conference room.

Office space is growing in Kelowna and Murray Wills with Colliers International is warning that the supply might outpace the demand in the near future.

"The office sector has been slower than other asset classes," he said.

Murray, vice-president and managing broker for Colliers in Kelowna, said the increased amount of office space construction doesn't quite match up with the demand for such space. He said such a large influx of new office space will require time for the market to absorb the changes.

Murray said a supply that overtakes demand will create basic economic problems in the short-term. With a sprawling inventory of office spaces, there could be a higher rate of vacancies and a glut of lower lease rates.

"A huge office tower is going to affect that area of the real estate market," he said.

Dallas Gray, marketing agent for commercial properties with Al Stober, is confident the market can support additional office space. He said the company wouldn't invest in such a big project if the market couldn't support it.

"The demand is there," Gray said.

While Murray can see trouble in the immediate future, he thinks Kelowna's overall real estate prospects are bright. He said people want to move to the city for its vibrancy, which keeps the real estate market healthy. Extra office space should sort itself out as the years go by.

"The office market is a small part of a commercial world," he said.

The Landmark 7 is expected to be finished by 2022.

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