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TORONTO:  Growth by the big banks in Toronto and Vancouver is helping to boost the Canadian office real estate market and offset a rise in vacancy rates in most Canadian cities, says a report by commercial broker CB Richard Ellis Limited.

In its latest quarterly assessment of Canada's commercial and industrial market, CB Richard Ellis said Monday the strong banking sector is fuelling demand for Class A office space in downtown Toronto and Vancouver and providing some hope for a recovery in commercial real estate.

In the last 18 months or so, commercial and industrial property markets have been hit by the impact of the 2008-2009 recession and the building of new office space in many cities.

``The fundamentals in the financial sector are strong and helping to stabilize the market as a whole,'' said John O'Bryan, vice-chairman of CB Richard Ellis.

The overall vacancy rate for the downtown and suburban markets has held at 10.1 per cent in both the first and second quarters of this year, up from 8.3 per cent in the second quarter of 2009. Much of that reflected new building added to markets such as Toronto and Calgary.

``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,'' added O'Bryan.

``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 breaking down regional markets, the CB Ellis report noted vacancy rate increases in most cities during the second quarter from a year earlier:

_ Vancouver's vacancy rate increased to 10.2 per cent from 7.8 per cent, but demand in the downtown core remained strong;

_ Calgary's vacancy rate jumped to 15.7 per cent from 10.2 per cent, as new office space was added to supply;

_ Edmonton's rate was 10.5 per cent, while Winnipeg's rate rose slightly to eight per cent from 7.9 per cent.

_ In Toronto, major increases in new construction contributed to a year-over-year vacancy rate increase to 9.6 per cent from 8.4 per cent a year earlier.

_ Recording the lowest vacancy rate in Canada, Waterloo Region's rate shrunk slightly to 5.2 per cent from 5.9 per cent as the city's high-tech sector led by Research in Motion Ltd. (TSX:RIM), continued to expand.

_The office market in Ottawa remained stable, with the vacancy rate up marginally to 5.3 per cent from 5.1 per cent year-over-year.

_ Montreal's office market vacancy rose to 10.8 per cent from 9.7 per cent, while the overall office vacancy rate in Halifax shrank during the second quarter to nine per cent from 9.7 per cent.