This is a question that I am often asked when I meet someone, and I tell them that I am a commercial real estate agent. The answer really depends on what market we are talking about i.e office , industrial, investment, suburban downtown, etc and from who’s perspective- Landlord , Tenant etc.
Broadly speaking there are a few main narratives that dominate this discussion.
1.Toronto Downtown Office Market
Vacancy rates for office space in the downtown market are currently at a record low of 2.4%. Supply simply has not been able to keep up with demand. Recently we have seen major deals such as TD Bank preleasing 840,000 sq ft at 160 Front Street, Shopify, Indigo and the Board of Trade have also done major deals. Class A average asking rates in the Financial Core recently broke $40.00 psf for the first time. Another major factor behind the demand for space is being fueled by coworking activity by companies such as Wework, Spaces, and Regus. The growth of Tech companies is also a major contributor to demand for space.
- The Toronto Suburban Office Market
The suburban office market is much different from the downtown market. New supply of office space for lease has kept more inline with demand. The overall vacancy rate stands about 12.5%. and is highest in the West market where it stands about 14.7%. Asking Net rates in the suburban office market average approximately $16.00 per square foot.
- The Toronto Suburban Industrial Market
Toronto’s Industrial market continues to be a very tight market. The availability rate continues to drop to a record low of 1.2%. The average net asking rate increased for the tenth the consecutive quarter to a record high of $8.57 psf representing a year over year increase of 28%. This does not leave industrial tenants looking for space either for lease or sale with a lot of options. Many tenants are renewing their leases early in order to firm up their rates and lock their space down. With the apparent decline of manufacturing, many people are asking what has led to this situation. The economy is very diversified and has been strong. Supply simply has not kept up with the demand for industrial space. The development community in Canada is relatively conservative and we have nearly run out of land zoned for industrial development, The growth of ecommerce and fulfillment technologies has made the GTA a hub which services all of Canada. The industrial development pipeline has drastically increased in the last quarter however it is doubtful that it will be able to keep up with demand long term