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Newmark Knight Frank Devencore Reports on Robust Toronto Office Market

GTA's Corporate Real Estate Market Still In Growth Mode

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(11/28/2013)

TORONTO - In its Real Estate Market Study published today, Newmark Knight Frank Devencore reported that the combined Class "A" and Class "B" office vacancy rate in downtown Toronto rose to 5.1% in the first half of 2013, up from 4.4% at the end of 2012. However, tenant demand for new office tower space seems to be continuing. During the recession, over 4 million square feet of office space was built in downtown Toronto, and most of that space has now been leased. At present, over 5 million square feet of office space is under construction.

"Some real estate analysts have wondered whether the demand is really strong enough to absorb all of this new space. This concern also existed in 2008-2009 when the global economy entered into a tailspin," said Allan Schaffer, President/Broker of Record of Devencore Realties Corporation Canada Limited, Brokerage.  "However, vacancy rates have dropped since then and with much of Toronto's younger workforce migrating to the downtown core, we anticipate that larger companies that wish to attract and retain these people will continue to seek downtown space. It is also likely that landlords losing tenants to the new office towers will have to be aggressive in marketing their older properties. Consequently, the best opportunities for tenants will be found on a building-by-building basis."

"Since the beginning of this year, vacancy rates have remained very stable in the corporate corridors outside of Toronto's downtown core," said Rob Renaud, Senior Vice President and Managing Principal/Broker of Record at Devencore Realties Corporation (Toronto West) Ltd., Brokerage. "Vacancies are highest in the Airport East area along Airport Road where many of the buildings are older, and lower west area of the Airport, where more of the buildings conform to LEED standards and certain amenities such as free parking are more widely available."

In the rest of the Canada, combined Class "A" and Class "B" vacancy rates spaces have climbed only slightly through 2013, from 4.5% to 4.9%, reflecting a relatively flat economy. At the same time, it should be noted that the country's total inventory of built office space has increased considerably over the past two years, from approximately 207.7 million square feet in mid-2011 to 210.9 million square feet today.

"The downtown Toronto market seems to be balanced and offers no real advantages to either landlords or tenants," Mr. Schaeffer said. "Over the next few years tenant options and leverage should increase as the new tower projects reach completion."

 

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 (NGKF) is one of the world's leading commercial real estate advisory firms. Together with its affiliates and London-based partner Knight Frank, NGKF employs more than 12,000 professionals, operating from more than 320 offices in established and emerging property markets on five continents.

With roots dating back to 1929, NGKF's strong foundation makes it one of the most trusted names in commercial real estate. Its integrated services platform includes leasing advisory, global corporate services, investment sales and capital markets, consulting, program and project management, property and facilities management, and valuation services. A major force in the real estate marketplace, NGKF serves the local and global property requirements of tenants, landlords, investors and developers worldwide. For further information, visit www.ngkf.com.

NGKF is a part of BGC Partners, Inc. (NASDAQ: BGCP), a leading global brokerage company primarily servicing the wholesale financial and real estate markets. For further information, visit www.bgcpartners.com.

 

For further information contact:

Allan Schaffer
President / Broker of Record
416-366-0366, ext. 231
Newmark Knight Frank Devencore
aschaffer@devencorenkf.com

Devencore Realties Corporation
Canada Limited, Brokerage
130 Adelaide Street West, Suite 2929
Toronto, Ontario M5H 3P5


Rob Renaud
Senior Vice President and Managing Principal
Broker of Record
416-366-0366, ext. 241
Newmark Knight Frank Devencore
rrenaud@devencorenkf.com

Devencore Realties Corporation
(Toronto West) Ltd., Brokerage
1 Eva Road, Suite 409
Toronto, Ontario M9C 4Z5