TORONTO – Business – In its Real Estate Market Research study published today, Devencore announced that the vacancy rate for all office classes in downtown Toronto has fallen to a new historic low, at 2.5%, and is continuing to drop. At the same time, asking gross rents are steadily rising. The market is very much landlord-favored, a situation that is not likely to change over the short or medium term.
The majority of leasing activity is focussed on the Class A market and is driven in large part by the technology, financial and service sectors. Class A average gross rents are now at $47.91/sf and closer to $60/sf in the Financial Core.
“Tenants seeking top-quality office space in downtown Toronto are facing increasing challenges,” said Allan Schaffer, President/Broker of Record of Devencore’s downtown Toronto office. “The good news is that a new development cycle is fully underway and over 5.5 million square feet of office space is scheduled to be delivered to the market in 2020/2021. However, there are very few major deliveries over the next two years. So the market will continue to be very tight.”
The Devencore report states that there are some leasing opportunities in older Class A buildings that are backfilling space vacated by tenants who recently relocated to newer buildings, but this space is leasing up quickly. For some tenants, the best option may be to look outside the downtown core for a wider range of leasing opportunities and less expensive rents.
“Over the next few years the inventory of downtown office space available for leasing will continue to shrink,” Mr. Schaffer said. “Vacant contiguous spaces greater that 25,000 square feet are extremely rare, and will remain so for the foreseeable future. As a result, tenants that need office space in downtown Toronto will be challenged until at least 2020 when the new inventory currently under construction will begin to be delivered. Even then, demand will likely continue to outpace supply as over 50% of the space now being built has already been pre-leased.
To read the complete market study, please go to http://devencore.com/market_information_detail.php?id=46
Founded in 1972, with national coverage, Devencore is the largest privately-owned corporate real estate brokerage and advisory firm in Canada. We offer comprehensive services that are specifically designed to ensure that all real estate decisions are supported by effective real estate strategies and professional execution.