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Avison Toronto office market report q2 2015 cre

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Avison Toronto office market report q2 2015 cre

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Avison Toronto office market report q2 2015 cre

  1. 1. Market Overview Against a backdrop of disappointing Canadian economic data, the Greater Toronto Area (GTA) office market finished the second quarter and midway point of 2015 with positive results, as the suburbs outperformed the downtown and midtown markets. Positive absorption (mostly in class A) during the quarter was attributed to steady deal flow, with more than 4 million square feet (msf) transacted in the past six months and tenants gradually taking occupancy in new developments. As a result, availability across all building classes fell to 11.6% (-40 basis points (bps)), while vacancy inched higher to 9.9% (+10 bps). Almost 1.2 msf of office space was completed, largely in the suburban Toronto West market, bringing the six-month tally to 1.4 msf. Another 5.7 msf is under construction, of which two-thirds is in Downtown Toronto. Considerable interest remains from U.S. tenants looking to expand or establish a foothold in the market, particularly downtown. Despite large blocks of space coming to the market as tenants relocate to recently completed towers, the Downtown market remains resilient. Modest, but positive absorption was recorded, owing to strong occupancy gains in Downtown South (class A), as Marsh Canada relocated from 161 Bay St. and 70 University Ave. in the Financial Core to the recently completed Bremner Tower. Demand was also centred on class B and C buildings in the Downtown East and King & Dufferin nodes. Overall, downtown vacancy increased 30 bps to 6.8%, while availability decreased 40 bps to close the quarter at 9.2%. Allied Properties REIT completed its QRC West brick-and-beam redevelopment and, with partner RioCan REIT, launched the preleasing of the King Portland Centre (620 King St. W.). The LEED Platinum, mixed-use development (retail and 15-storey residential rental) will offer 250,000 square feet (sf) of office area over 12 storeys in trendy Downtown West. Now under construction, Concert Properties introduced 20 Wellington St. E., a boutique five-storey, 43,000-sf office building scheduled for completion in mid-2017 - part of a mixed-use development also comprising a 58-storey residential condominium in Toronto’s Financial Core. In Midtown’s Bloor market, Manulife Financial’s decision to re-stack its operations at 250 Bloor St. E. and free up almost 202,000 sf has paid dividends as the Toronto Transit Commission inked a deal for 66,000 sf at the close of the quarter. Availability across all building classes in Midtown settled at 7.5% (-40 bps), while class A availability sits 90 bps lower at 6.6% (-10 bps). The suburban market bounced back, thanks to a very strong performance by Toronto West, which recorded its best quarterly absorption result since 2012. This was boosted by tenants such as TJX, which moved into its new headquarters at 60 Standish Court. Toronto West is responsible for all of the new supply delivered in the suburbs year-to-date (1.1 msf), with 874,000 sf completed in the second quarter alone - the most since Q1 2009. A further 1.2 msf is under construction. Notable suburban transactions included: PointClickCare, currently in Meadowvale, leasing the former Target Canada headquarters (185,000 sf) at AeroCentre V in Airport Corporate Centre; Huawei Technologies expanding and renewing 126,000 sf at 15 & 19 Allstate Pkwy. in the Hwy. 404 & Hwy. 407 node; and TD Bank leasing 140,000 sf of the 306,000-sf former Amex campus at 101 McNabb St. in the Hwy. 404 & Steeles node. Consequently, overall suburban availability (14.3%) and vacancy (13%) trended lower, falling 50 bps and 20 bps, respectively. 2ND QUARTER 2015 Greater Toronto Area Office Market Report Partnership. Performance. G R E A T E R T O R O N T O A R E A M A R K E T S U M M A R Y NEW SUPPLY CHANGE IN OCCUPIED AREA (YTD) (SQ. FT.) TOTAL VACANT RATE (%) TOTAL AVAILABLE RATE (%) spread between Ava+Vac '00 3,407,812 6,148,725 5.6% 6.8% 1.2% '01 2,879,872 -1,197,220 8.2% 9.9% 1.7% '02 3,390,524 -1,233,702 11.0% 12.2% 1.2% '03 550,040 -1,547,390 12.3% 13.3% 1.0% '04 1,841,342 2,848,552 11.5% 12.5% 1.0% '05 1,687,599 3,876,835 10.0% 11.2% 1.2% '06 873,913 4,302,979 7.8% 9.9% 2.1% '07 1,794,207 3,204,546 6.8% 8.5% 1.7% '08 1,011,293 1,784,179 6.4% 8.5% 2.1% '09 4,755,533 593,343 8.7% 10.7% 2.0% '10 1,520,727 1,153,346 8.7% 10.6% 1.9% '11 1,302,713 2,439,089 7.7% 9.8% 2.1% '12 1,120,254 585,343 7.9% 9.3% 1.4% '13 1,683,952 -846,622 9.1% 11.6% 2.5% '14 2,382,040 975,667 9.6% 11.8% 2.2% YTD Q2'15 1,364,596 239,947 9.9% 11.6% 1.7% GREATER TORONTO AREA HISTORIC OFFICE MARKET TRENDS 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% -2,000 -1,000 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 YTD Q2'15 TotalAvailable/VacantRate(%) SquareFeet(000's) Greater Toronto Area Historic Office Market Trends - All Classes New Supply Change In Occupied Area Vacancy Rate Availability Rate M A R K E T F A C T S NEW SUPPLY CHANGE IN OCCUPIED AREA (YTD) (SQ. FT.) TOTAL VACANT RATE (%) TOTAL AVAILABLE RATE (%) spread between Ava+Vac '00 3,407,812 6,148,725 5.6% 6.8% 1.2% '01 2,879,872 -1,197,220 8.2% 9.9% 1.7% '02 3,390,524 -1,233,702 11.0% 12.2% 1.2% '03 550,040 -1,547,390 12.3% 13.3% 1.0% '04 1,841,342 2,848,552 11.5% 12.5% 1.0% '05 1,687,599 3,876,835 10.0% 11.2% 1.2% '06 873,913 4,302,979 7.8% 9.9% 2.1% '07 1,794,207 3,204,546 6.8% 8.5% 1.7% '08 1,011,293 1,784,179 6.4% 8.5% 2.1% '09 4,755,533 593,343 8.7% 10.7% 2.0% '10 1,520,727 1,153,346 8.7% 10.6% 1.9% '11 1,302,713 2,439,089 7.7% 9.8% 2.1% '12 1,120,254 585,343 7.9% 9.3% 1.4% '13 1,683,952 -846,622 9.1% 11.6% 2.5% '14 2,382,040 975,667 9.6% 11.8% 2.2% YTD Q2'15 1,364,596 239,947 9.9% 11.6% 1.7% GREATER TORONTO AREA HISTORIC OFFICE MARKET TRENDS 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% -2,000 -1,000 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 YTD Q2'15 TotalAvailable/VacantRate(%) SquareFeet(000's) Greater Toronto Area Historic Office Market Trends - All Classes New Supply Change In Occupied Area Vacancy Rate Availability Rate
  2. 2. E. & O.E.:The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by AvisonYoung. Acknowledgement: Data for graphs, charts and tables used in this report are sourced from AvisonYoung and Altus InSite. Some of the data in this report has been gathered from third party sources and has not been independently verified by Avison Young. Avison Young makes no warranties or representations as to the completeness or accuracy thereof. Q2-15 Asking Net Rent (Avg. $psf) Additional Costs (Avg. $psf) Downtown 20.52$                 18.04$                    Midtown 18.15$                 19.13$                    East 13.44$                 13.41$                    North 16.55$                 16.63$                    West 15.13$                 12.72$                    GTA Overall 15.98$                 14.67$                    $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 Downtown Midtown East North West GTA Overall Asking Net Rent (Avg. $psf) Additional Costs (Avg. $psf) $p.s.f GTA - Occupancy Costs - All Classes For more information on this report, please contact Avison Young: Bill Argeropoulos 416.673.4029 Principal & Practice Leader, Research, Canada Avison Young 18 York Street Suite 400, Mailbox #4 Toronto, ON M5J 2T8 T 416.955.0000 F 416.955.0724 GTA - Occupancy Costs - All Classes GTA - Sublet Availability - All Classes Asking Net Rent (Avg. $psf) Additional Costs (Avg. $psf) avisonyoung.com © 2015 AvisonYoung Commercial Real Estate (Ontario) Inc., Brokerage G R E A T E R T O R O N T O A R E A S I G N I F I C A N T T R A N S A C T I O N S C O M P A R I S O N O F L E A S I N G O P T I O N S F O R T E N A N T S - G T A Q2-15 Downtown Midtown East North West GTA Overall Sublet Available (sq. ft.) 1,046,012 310,977 413,656 170,037 1,115,888 3,056,570 Sublet as % of Total Available 16% 26% 10% 15% 15% 15% Total Available 6,635,466 1,213,508 4,023,246 1,104,523 7,250,647 20,227,390 0% 5% 10% 15% 20% 25% 30% 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Downtown Midtown East North West GTA Overall 000’ssq.ft. Sublet Available (sq. ft.) Sublet as % of Total Available GTA - Sublet Availability - All Classes Sublet Available (sq. ft.) Sublet as % of Total Available

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