As more people move downtown and companies aim to stay close to their work force, the Toronto office market continues to face tight supply. But despite this quarter’s record low vacancy rate of 5.8 per cent throughout the GTA and the downtown’s all-time low of 3.9 per cent, the future could look different.
The recently released GTA Fall 2013 Office Market Report from Colliers International points to possible double digit vacancy rates around 2016-2017, with many new spaces coming online. While the downtown core has seen positive absorption, large office space projects such as RBC Waterpark Place and the new Ernst & Yonge tower would add extra square footage to the market, potentially boosting the vacancy rate and pushing down prices. Some tenants are looking ahead and even negotiating their leases to end around 2016-2017 period in the hopes of better deals on rent.
Office demand in the downtown is largely pegged on the growth in the Financial Services sector. In the last quarter, the Financial Core saw a slight decline in vacancy from 4.6 to 4.4 per cent.
Despite the high-profile, high-rise office space boom in central Toronto, the suburbs are also experiencing growth too, especially in the Mississauga City Centre and Meadowvale submarkets.
Some large transactions include the relocation of big companies such as SNC Lavalin, Royal Sun Alliance, Price Waterhouse Coopers and companies looking to relocate or expand their offices.
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