Toronto - In its Real Estate Market Study published today, Newmark Knight Frank Devencore reported that combined Class "A" and Class "B" office vacancy rates in downtown Toronto rose from 4.8% to 5.0% over the course of 2015. Much of the increase was attributable to the new buildings that were added to the total inventory during the year. At the present time there is approximately 5 million square feet under construction or about to break ground and there are no signs of the construction boom easing significantly over the short term. Tenants in the financial services, high tech and media entertainment industries are generating much of the demand.
"It remains to be seen just how much new space the market can absorb," said Allan Schaffer, President/Broker of Record of Newmark Knight Frank Devencore's Downtown Toronto office1. "There are some new developments that have large blocks of space available and a number of new projects are seeking only relatively minimal pre-leasing commitments before proceeding. Over the longer term, the implications for tenants are very positive as there will be a steady supply of state-of-the-art Class "A" space and abundant leasing opportunities in older Class "A" buildings that have been vacated by tenants relocating into the new towers."
Additionally, there continues to be strong demand from the creative class for character spaces outside the traditional downtown core as many high tech, entertainment and public relations firms continue to migrate to the downtown east and downtown west areas.
In the GTA West, the combined Class "A" and Class "B" vacancy rate rose from 12.9% to 18.4% in 2015. As the case has been for the past few years, much of the available space is located in the Airport East area along Airport Road where a majority of the inventory is three or four decades old.
"Part of the reason for the high vacancy rate is the new inventory that has been delivered to the market. Approximately 800,000 square feet has been delivered in the GTA West over the past 18 months and another 1 million square feet of developments are currently underway primarily in the Airport Corporate Center, Meadowvale and Oakville areas," said Rob Renaud, Managing Principal/Broker of Record at Newmark Knight Frank Devencore's Toronto West office².
"Demand remains relatively strong for new spaces that conform to LEED standards and have contemporary amenities; as a result, landlords with older inventory are forced to upgrade and market their properties much more aggressively," Mr. Renaud added.
Across the rest of Canada, occupancy trends have generally followed local economic conditions. In Calgary and Edmonton, for example, vacancy rates have risen sharply following the collapse of global oil prices, while most other cities have seen more moderate shifts. It should also be noted that the inventory of downtown office space across the country has expanded considerably. Over 5.3 million square feet has been added over the past two years, and there are major projects underway in most cities that will further augment this expansion.
About Newmark Knight Frank Devencore
As part of Newmark Grubb Knight Frank, one of the world's leading commercial real estate advisory firms, Newmark Knight Frank Devencore is Canada's largest corporate real estate advisor and brokerage, exclusively representing corporate, industrial and retail space users. With offices across the country, Newmark Knight Frank Devencore offers its global clientele comprehensive services that are individually designed to ensure executive real estate decisions are supported by effective strategies and professional execution. To learn more about our capabilities, please visit www.devencorenkf.com.
About Newmark Grubb Knight Frank
Newmark Grubb Knight Frank is one of the world's leading commercial real estate advisory firms. Together with London-based partner Knight Frank and independently-owned offices, NGKF's 12,800 professionals operate from more than 370 offices in established and emerging property markets on six continents.
With roots dating back to 1929, NGKF's strong foundation makes it one of the most trusted names in commercial real estate. NGKF's full-service platform comprises BGC's real estate services segment, offering commercial real estate tenants, landlords, investors and developers a wide range of services including leasing; capital markets services, including investment sales, debt placement, appraisal, and valuation services; commercial mortgage brokerage services; as well as corporate advisory services, consulting, project and development management, and property and corporate facilities management services. For further information, visit www.ngkf.com.
NGKF is a part of BGC Partners, Inc., a leading global brokerage company servicing the financial and real estate markets. BGC's common stock trades on the NASDAQ Global Select Market under the ticker symbol (NASDAQ: BGCP). BGC also has an outstanding bond issuance of Senior Notes due June 15, 2042, which trade on the New York Stock Exchange under the symbol (NYSE: BGCA). BGC Partners is led by Chairman and Chief Executive Officer Howard W. Lutnick. For more information, please visit http://www.bgcpartners.com/.
For further information contact:
Broker of Record
416-366-0366, ext. 231
Newmark Knight Frank Devencore
1 Devencore Realties Corporation
Canada Limited, Brokerage
130 Adelaide Street West, Suite 2929
Toronto, Ontario M5H 3P5
Broker of Record
416-366-0366, ext. 241
Newmark Knight Frank Devencore
² Devencore Realties Corporation
(Toronto West) Ltd., Brokerage
1 Eva Road, Suite 409
Toronto, Ontario M9C 4Z5