Weekly Regional Business Intelligence

Written by Kieran Delamont, Associate Editor, London Inc.

London the only market to experience significant slowing as downtown office vacancy crests 30 per cent

Three in ten downtown London offices are currently empty, according to new data from commercial realty firm CBRE, marking the first time the core vacancy rate has eclipsed 30 per cent, settling at 30.4 percent for Q2 of this year. Associate vice-president at CBRE Greg Harris said that the vacancy rate continues to climb as “the office market is still right-sizing.” Nonetheless, London is now diverging from a national trend that is seeing vacancy rates elsewhere starting to stabilize. “The only market to experience significant slowing this quarter was London,” the report stated. “Nearly all of this softening came from its downtown market, which is facing acute challenges in its revitalization.” The office vacancy rate in London’s suburban areas was much better, coming in at 10.6 per cent, while the industrial market continues its strong performance, with the vacancy rate ticking up ever so slightly to 1.5 per cent.


The upshot: The only real positive spin that CBRE was able to put on London’s downtown office vacancy situation is that it is one of few cities to bet big on office-to-residential conversion and noted that 100,000 square feet of office space came off the commercial market, with up to 330,000 square feet set to join it in the near future. There’s also an application for conversion at 376 Richmond Street, the SMG Law Firm building. “All located in the city’s core, these conversions should reinvigorate the downtown market,” the report said. 

Read more: CBRE | London Free Press

Exponent Energy announces production partnership with Black Fly Beverage Co.

London’s Exponent Energy Inc., producers of a line of plant-based energy drinks, has announced a partnership arrangement with London’s Black Fly Beverage Co. and will shift its production from Equals Brewing to the Black Fly plant on Highbury Avenue North as it aims to keep up with growing demand. Founded in 2021 by Matt Stirling and Mike Pullam, Exponent made quick work of entering the U.S. market, launching its product and opening an office there in 2023. That has helped boost expected demand from one million cans last year to over two million next year, and for that they need more production capacity. “We have had a lot of expansion in Canada and the U.S and as we grow we are excited to partner with Black Fly, they are a big player in the co-manufacturing space,” Pullam told The London Free Press. Martin Kamil, CFO and COO at Black Fly, added that he has “known Matt and Mike for a while, and they have created something from nothing. It is what we did at Black Fly. It is always a pleasure to work with London brands.”


The upshot: Exponent has been riding a wave of change and disruption within the energy drinks market, which has grown far more competitive over the last few years as new challengers take on established brands like Monster and Red Bull. The company said it expects to triple its distribution network by next year (from 1,000 to 3,000 retail locations) and expand its U.S. footprint from nine U.S. states to 20. “We started Exponent knowing we wanted to disrupt the market and get ahead of the changes we’ll see in the category over the next three to five years,” Pullam told Canadian Convenience Store News last year, noting that there’s been a lot of demand from retailers that “are especially open to something new that they haven’t seen before.” 

Read more: CTV News London | London Free Press

On hold: June rate cut fails to revive Londons housing market

The London and St. Thomas Association of Realtors (LSTAR) released preliminary data for home sales in the month of June, pretty much confirming what every realtor in the city already knows: it’s shaping up to be a long summer. According to LSTAR, a total of 678 homes exchanged hands in the region (the LSTAR catchment area also takes in Strathroy, St. Thomas and portions of Middlesex and Elgin counties), down from 774 home resales in May and a year-over-year decline when compared to the 745 homes that solid in June 2023. There were 1,510 new listing in June, about on par with the 1,563 listings that came on the market in May. Doing her best to put a positive spin on things, LSTAR board chair Kathy Amess pointed to pricing stability (the average price of a resale home in the region was $671,309 in June) and anticipation of further Bank of Canada rate cuts as market positives. “The market dynamics in our region continue to show resilience and adaptability,” she said. “The slight increases in benchmark prices across most areas reflect a steady demand for properties. While some areas have seen fluctuations, the overall market remains strong, providing opportunities for both buyers and sellers.”


The upshot: As London Inc. real estate analyst Marcus Plowright said in his On the House column this week, declining consumer confidence, minimal risk tolerance and the expectation of something less on the horizon continues to plague a housing market that remains fully in wait-and-see mode. While the Bank of Canada’s rate cut last month provided some initial relief for homeowners and homebuyers, the June sales result suggests that most homebuyers will require multiple rate cuts before they move off the sidelines.

Read more: LSTAR | London Inc.

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Good things come to those who wait: Funding for electric fleet starts to flow to Langs Bus Lines

The federal government is providing approximately $44 million in funding to Langs Bus Lines as the school bus operator looks to replace about half of its fleet of diesel school buses with electric versions, the company announced last week. The funding is comprised of a $22.4 million loan from the Canada Infrastructure Bank, with the other half made up of grant funding through the federal Zero Emission Transit Fund (ZETF), which will go towards purchasing 200 Quebec-made Lion Electric buses. Langs will chip in just over $23 million from their end. “These [diesel] vehicles drive thousands of kilometres every year, contributing to pollution and noise,” said London West MP Arielle Kayabaga. “The federal government’s investment in 200 electric, zero-emission school buses for Langs Bus Lines will benefit students and our communities for years to come.” Kevin Langs, VP of the company, added that “thousands of students in our service area throughout Southwestern Ontario will benefit from a safe, emissions-free ride every school day.”


The upshot: Langs has been waiting quite a while to close the funding deal with the federal government and actually get these buses on the road ― they first put in the order for the 200 buses with Lion Electric back in 2021, with the condition that their application for ZETF funding was approved. Funding through the ZETF program has been slow-moving, to say the least, evidenced by the three-year delay between the announcement of the plan to purchase the buses and last week’s announcement that the funding was coming through. Earlier this year, Lion Electric opted to cut staff in a round of cost-savings, citing “delays experienced with Canada’s Zero-Emission Transit Fund,” which Lion’s BEO Marc Bedard said was “continuing to adversely impact our school bus deliveries.” 

Read more: CBC News London | Newswire

Western researchers pioneer anti-forgery tech

Researchers at Western University have developed new materials that will make it very hard to make money. We mean this literally: a team of researchers has created new, cutting-edge anti-counterfeiting technology that could make it much harder to create counterfeit bills ― as well as other counterfeit documents. The new materials are “inorganic phosphor nanoparticles” with a property called persistent luminescence, where particles can be programmed to disappear in stages after being exposed to UV lights, something that is very hard for would-be counterfeiters to replicate. The team worked with the Canadian Light Source at the University of Saskatchewan, the only synchrotron in the country.


The upshot: Forged money is much less of a problem in Canada now than it has been historically ― partially thanks to the new plastic money. (If you’re curious, counterfeiting peaked in 2004, with around 550,000 fake bills detected by the Bank of Canada in circulation.) But it’s still something that comes up outside of the currency, in the worlds of art, documents and medications. The researchers believe the newly developed materials and its programmable properties is a gamechanger. “We can incorporate these into our material to construct a complicated pattern so that different parts glow for different durations,” said Lijia Liu, a Western chemistry prof. “That is our ultimate security. It will be very difficult to find something that can achieve that property.”

Read more: Western News

London-area job vacancies drop by almost 50 per cent; some sectors still struggle to fill positions

There were just over 10,000 job vacancies in the London region in the first quarter of 2024, according to new data from StatsCan ― a huge drop from the peak of late 2022, when there were over 21,000 vacancies. London realized an annual decline in job vacancies of 27.7 per cent, making it one of the fastest declines in Ontario. The vacancies continue to be clustered in certain sectors. Healthcare had over 2,000 vacancies, while sales and service jobs had 1,860 vacancies. At the same time, the average wage has risen from $23.95 in Q1 2023 to $27.30 in Q1 2024.


The upshot: Analysts say that the data tells only a partial story. While the labour market has slackened somewhat, with the job vacancy numbers reflecting that, the economy is having a more difficult time connecting workers with employers, and some sectors are still in labour shortage conditions. “The employment rate has increased, but the vacancies are still a little bit higher than they were in the past,” StatsCan analyst Jamie Rudolph-Zbarksy told The London Free Press. “I wouldn’t say necessarily that [the job market has] recovered,” he added. “If you look at employment, it’s higher than it was pre-Covid, so the employment rate has increased [but] the vacancies are still a little bit higher than they were in the past.”

Read more: StatsCan | London Free Press

Dispatch: July 5, 2024

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