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Newmark Knight Frank Devencore Reports on Dynamic Toronto Office Market

Construction Boom Continues while the Availability of Sublease Space Rises

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(06/17/2014)

TORONTO - In its Real Estate Market Study published today, Newmark Knight Frank Devencore reported that the building boom in Toronto's Downtown District continues unabated, although the amount of sublease space available on the market is climbing. Combined Class "A" and Class "B" vacancy rates in downtown Toronto are approximately 6.0%.

"A new spate of construction projects has been launched over the past 2 years," said Allan Schaffer, President/Broker of Record of Newmark Knight Frank Devencore's Toronto office1. "Once all of these projects are completed another 5 million square feet of state-of-the-art office space will be added to the downtown inventory. At the same time, there is an increase in the amount of sublease space coming onto the market, driven by companies that are consolidating their office spaces as well as by downsizings or corporate dissolutions. As a result, space options and negotiating leverage for tenants should continue to improve in the months ahead."

In Canada's major cities, the combined Class "A" and Class "B" vacancy rate edged up from 4.5% to 5.9% in 2013. However, construction activity remains strong across the country and new towers are being built in virtually every city. The appetite for this premium space also remains strong. In most instances, space in the new towers, most of which are LEED-certified, is being fairly rapidly leased.

In most of the submarkets outside of Toronto's downtown core, Class "A" and Class "B" vacancy rates have risen over the past six months.

"In the GTA West, for example, combined Class "A" and Class "B" vacancy rates rose from 12.7% to 14.2%," said Rob Renaud, Senior Vice President and Managing Principal/Broker of Record of Newmark Knight Frank Devencore's Toronto West office². "Activity continues to be pronounced in Meadowvale where a number of new office towers are being marketed on a pre-lease basis. Space is most abundant in the Airport East area along Airport Road where many of the buildings date from the 1970s and 1980s and have difficulty competing against the more modern and efficient buildings in the area that conform to LEED standards."

"As tenant options increase in downtown Toronto, the key question now is whether or not the rise in sublease space points to a waning of demand in the marketplace," Mr. Schaffer added. "If this is the case, it remains to be seen what impact this decrease in demand will have on occupancy rates in both the new tower space and the older Class "A" office buildings

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 12,000 professionals operate 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. 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. (NASDAQ: BGCP), a leading global brokerage company primarily servicing the wholesale financial and real estate markets. For further information, visit www.ngkf.com.

 

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

•2            Devencore Realties Corporation (Toronto West) Ltd., 1 Eva Road, Suite 409, Toronto, Ontario M9C 1X9

 

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