KITCHENER - Waterloo Region's tech sector continues to drive demand in the local commercial real estate market.

The overall office vacancy rate in the region stands at 10.9 per cent, the fourth-lowest rate in Canada, a breakfast audience at CBRE's annual market outlook heard Wednesday.

"We anticipate a marked decline in vacancy over the coming year," said Peter Whatmore, executive managing director of CBRE's Southwestern Ontario offices.

Last year, 1.3 million square feet of space in 19 older buildings was repurposed in the region for office use, in what's called the restoration/conversion class of office inventory.

"Post and beam structures offer character-filled office space that has long been a magnet for tech tenants," Whatmore said.

The first office building to be constructed in Kitchener's core in more than a generation is starting to take shape at 345 King St. W. And suburban office buildings are luring tenants by providing amenities that are harder to find outside of the downtown cores.

More than 100,000 square feet in a former BlackBerry building at 2220 University Ave. E. sat vacant for three years until extensive lobby renovations were done and a coffee lounge opened.

"The new vibe in the building appealed to several tenants," said Whatmore.

The tech sector is accounting for more than 60 per cent of the office real estate deals in the region and quality is key, CBRE Waterloo Region vice-president Todd Cooney said in a video presentation. "Companies are really looking at it as a recruitment tool."

In Toronto, 10 million square feet of office space is coming on the market in the next couple of years; 70 per cent has been pre-leased, with 17 per cent pre-leased by tech firms, said CBRE vice-chair Paul Morassutti.

At the same time, many economic indicators are pointing to a coming slowdown. "If tech is having an outsized impact on our market, how durable is that demand, and what happens if we have a slowdown?" Morassutti asked.

There would be some scaling back of demand, he predicted, "but fears of a dot-com style crash appear to be unfounded." The tech sector and surrounding ecosystems "are not going anywhere."

One of the challenges in building out that local tech sector even further lies in attracting and retaining talent, the audience heard.

"We do have what I'd characterize as a globally significant brain belt," said Tony LaMantia, president and chief executive officer of the Waterloo Region Economic Development Corp.

The sector's pace of growth means universities and colleges do struggle to keep up, said Communitech's chief strategy officer Avvey Peters. But the region still ends up losing 90 per cent of its post-secondary graduates, said Hongwei Liu, chief executive officer of Waterloo tech startup MappedIn.

And that's why it's so important to help local companies scale up, LaMantia said. "We need local, homegrown giants that are places where our grads want to work."

The market outlook also touched on other sectors including industrial, where demand is at record levels, CBRE Waterloo Region senior vice-president Mitchell Blaine said in a video recording.

Supply is nearly non-existent, land is becoming scarce and prices are rising, he said. "It's still a moment where (companies) can buy land," Blaine said. "My concern is this window of opportunity . is passing."

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