Calgary’s overall office vacancy rate experienced the biggest jump in the country in the second quarter of this year, rising to 15.7 per cent from 10.2 per cent a year ago.

The city also had the highest amount of new construction added to the market in the country of just over 1.2 million square feet, says a national report released today by CB Richard Ellis.

Demand for commercial space was steady in Canada’s major office and industrial markets, as vacancy rates remained stable or were trending slightly higher in most cities, year-over-year, according to the National Office and Industrial Trends Second Quarter Report from CBRE.

The overall vacancy rate for the downtown and suburban markets has held at 10.1 per cent in both first and second quarters of 2010 (up from 8.3 per cent in the second quarter of 2009). “The year-over-year increase was not an indication of weaker activity, but reflected the sheer volume of newly constructed space that became available in major markets over the last 12-18 months,” said CBRE.

In 2010, a total of 2,719,328 square feet of newly-constructed supply has been completed, year-to-date (YTD), with a significant amount of that space being added in Toronto and Calgary. This is an increase over the second quarter of 2009, when 2,503,340 square feet was added to the market, said the report.

The sublease market, which is a good indicator of improving market conditions, has decreased to 19.4 per cent of vacant space in second quarter from 21.8 per cent in first quarter 2010 and 22.9 per cent, year-over-year.

“It is remarkable to see the numbers holding steady given the current economic climate and the sheer amount of new construction that has been introduced to the market. The flood of new supply is not overpowering demand,” said John O’Bryan, vice-chairman of CBRE. “The panic of last year has largely been replaced by an extraordinary level of resiliency. We are seeing slow and steady improvements as nearly all of the office markets are at or near their bottom and positioned to move into a more positive cycle.”

In Calgary, CBRE said activity has dramatically improved but growth has remained generally flat.

“There has been a flight to quality as some tenants have taken advantage of depressed rents and traded up space moving from B to A class properties, but there has been little to no expansion. With 80 per cent of the downtown core occupied by natural resource-related companies, this sector will continue to influence the commercial real estate market,” said the report.