What’s responsible for the rapid rise in the Toronto office market?
Stefan Teague, executive director for Cushman’s Greater Toronto Area says business firms in the Toronto Areas looking to secure 300K SF-plus blocks are going through very difficult times. The largest Canadian office market has 72M SF. The tight vacancy rate in the region is becoming a big problem especially for nearby markets where vacancy rate is below 3%.
In Manhattan the vacancy rate stands at 4.3%, Chicago 11.3% and London is 4.3% but Toronto is one of North America’s leading growth office markets with many investors searching for large office spaces in the city.
For many business institutions, the location of their firm is very vital to the growth of the business and also in drawing in more clients and talents.
With limited supply of office spaces in Toronto it was not a surprise for real estate designer Peter Menkes that he was able to easily find occupants for a building at York and Harbour streets in the South Core. The 35-storey building was already leased out by the time it was open in 2016 to Sun Life Financial, CIBC Mellon and HOOPP.
According to Menkes, his company has plans of developing the LCBO site and Waterfront Innovation Center on Queens Quay East.
There are numerous firms that want to be in the building but it takes a while for a building to be developed. Firms are always in a rush to lease available spaces but according to Menkes it becomes easier if a new building gets a really large and popular firm to set the ball rolling.
Teague went on to add that there is likelihood for more buildings to be erected in a short period or else their pre-lease value will decline. Toronto’s available office spaces are almost fully leased.