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 in the first half of 2012 continued to be among the most active in Canada. Along with Calgary, Toronto has led the country in new office developments and leasing transactions.
In Downtown Toronto, the combined Class "A" and Class "B" vacancy rate fell from 5.3% to 4.5% over the last 12 months, representing an absorption of just under 1.5 million square feet of office space. Most of this activity was in the Class "A" office market where vacancy rates dropped from 5.5% in mid-2011 to 4.4% at the end of Q2 2012. Approximately 1.1 million square feet of office space was absorbed.
"Since 2008, approximately 3.5 million square feet of new Class "A" office space has been delivered to the downtown Toronto market," said Allan Schaffer, President/Broker of Record of Devencore Realties Corporation Canada Limited, Brokerage. "Almost all of this premium space has been leased. As a result, over the past twelve months the older Class "A" spaces that were vacated when tenants moved to the new towers have been attracting increased tenant interest and space absorption has accelerated. Good opportunities for tenants are still available; however, these opportunities may diminish in the quarters ahead."
In the GTA West, the availability rate is currently in the 13% range.
"At this vacancy level, there are still very good leasing opportunities," said Rob Renaud, Senior Vice President and Managing Principal at Devencore Realties Corporation Canada Limited, Brokerage. "Furthermore, there are no fewer than eleven buildings under construction, which collectively represent an inventory of almost 1.2 million square feet. These projects should all be completed over the next 2 to 3 years. The market for new, high-quality LEED® space should continue to be strong over the short to medium terms."
Across Canada, the combined Class "A" and Class "B" vacancy rate fell from 5.4% to 4.5% over the past year. Total vacant space in the country's major cities fell from 11.2 million square feet to 9.5 million square feet. At the same time, the total inventory of built space across the country increased by nearly two million square feet, due in large part to new office towers in Calgary and Toronto, which have both been experiencing a development boom.
"Demand for top-tier space shows no signs of easing," Mr. Schaffer said. "In Downtown Toronto, at least nine major projects are in various stages of development. The first of this new inventory will not arrive on the market before 2014; as a result, we are seeing asking rental rates creeping up. Given these market conditions, some tenants with leases coming up for renewal over the next 1 to 2 years are seeking to restructure their leases now as this may be the best time to secure competitive leasing rates as well as a certain degree of space flexibility."
About Newmark Knight Frank Devencore
Devencore is the Canadian partner of Newmark Grubb 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 Grubb Knight Frank
A part of BGC Partners, Inc. (NASDAQ:BGCP), Newmark Grubb Knight Frank is one of the largest commercial real estate service firms in the U.S. It brings together the strategic consultative approach to creating value for clients and leading position in the New York market that are hallmarks of Newmark Knight Frank; the complementary strengths of Grubb & Ellis in leasing and management, investment sales, valuation and capital markets services; and BGC's financial strength, proprietary technology, expertise in global capital markets and deep relationships with many of the world's leading financial institutions.
Newmark Grubb Knight Frank, together with its affiliates and London-based partner Knight Frank, employs more than 11,000 professionals, operating from more than 300 offices in established and emerging property markets on five continents. This major force in real estate is meeting the local and global needs of tenants, owners, investors and developers worldwide.
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