TORONTO - In its Real Estate Market Study published today, Newmark Knight Frank Devencore reported that the corporate real estate market in the Greater Toronto Area (GTA) continues to be one of the most active in the country. Prior to the onset of the economic crisis in 2008, the combined Class "A" and Class "B" vacancy rate in downtown Toronto reached an historic low of 3.9%, and is now returning to these levels. In downtown Toronto's Class "A" office sector, vacancy rates are in the 4.5% range (down a full percentage point from mid-2011) and in the smaller Class "B" sector, vacancy rates are now at 3.6% (down from 4.8% at the end of Q2 2011).
"The trend we identified over a year ago shows no signs of weakening: companies wishing to attract and retain a workforce of young professionals continue to seek state-of the-art space in or near the Downtown District where much of that that workforce has chosen to live," said Allan Schaffer, President/Broker of Record of Devencore Realties Corporation Canada Limited, Brokerage. "This has created a sustained demand for downtown office space, which has led to a number of new tower projects. What is interesting about some of these new projects is that they are being built outside of the traditional boundaries of the downtown core, and are effectively redefining the limits of that core."
Overall Class "A" and Class "B" vacancy rates in Canada's other major cities also fell significantly over the past year, from 6.8% to 4.7%, even though the total inventory of built space across the country increased by nearly two million square feet, due in large part to the new developments that came online in Calgary and Toronto. What is equally reflective of the strength of the market is the fact that office space in the new state-of-the-art towers has been in particularly high demand, despite its premium cost. The success of these projects, even in the midst and the aftermath of a global economic crisis, has spurred further development activity.
"Virtually all of the new Class "A" office space delivered to the market in downtown Toronto over the past few years has been leased, and now many tenants have turned their attention to the older Class "A" spaces that were vacated when tenants relocated to the new towers," Mr. Schaffer said. "None of the new developments in progress or in the planning stages will be completed before mid-2014; therefore, tenants who wish to locate downtown, or who are seeking to expand, will find it increasingly difficult to find suitable space. Moreover, negotiations with landlords will likely be more challenging, and we expect that asking rental rates will rise. Planning for the longer-term is very important; a tenant's real estate advisors can help clarify strategic options and identify the best leasing opportunities as they emerge."
About Newmark Knight Frank Devencore
Devencore is the Canadian partner of Newmark Knight Frank, one of the largest real estate service firms in the world. 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 Knight Frank
Newmark Knight Frank is one of the largest real estate service firms in the world. Headquartered in New York, Newmark Knight Frank and London-based partner Knight Frank together operate from more than 240 offices in established and emerging property markets on five continents. With a combined staff of more than 7,000 and revenues last year exceeding $993 million, this major force in real estate is meeting the local and global needs of tenants, owners, investors and developers worldwide. For further information, visit www.newmarkkf.com.
Newmark Knight Frank is a part of BGC Partners, a leading global brokerage company primarily servicing the wholesale financial markets. For further information, visit www.bgcpartners.com.
For further information contact:
President / Broker of Record
416-366-0366, ext. 231
Newmark Knight Frank Devencore
Devencore Realties Corporation
Canada Limited, Brokerage
130 Adelaide Street West, Suite 2929
Toronto, Ontario M5H 3P5
Director, Marketing and Communications
514-392-1330, ext. 225
Newmark Knight Frank Devencore
Real Estate Agency
800 René-Lévesque Boulevard West,
Montréal, Québec H3B 1X9