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Avison Young GTA Office Leasing Market Report Toronto CRE

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Avison Young GTA Office Leasing Market Report Toronto CRE

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Avison Young GTA Office Leasing Market Report Toronto CRE

  1. 1. Market Overview The third quarter of 2015 saw steady leasing velocity, as renewals, extensions and expansions of varying sizes occurred across all markets and building classes in the GreaterToronto Area (GTA). Premises of every size and quality can be found in most market segments, though pricing is fragmented. Downtown and, to a lesser degree, the midtown market contributed to the GTA’s modest expansion during the quarter, while the suburban market contracted. Demand remains centred on class A product, as the flight to quality witnessed throughout the year continues. Overall, GTA availability (11.6%) and vacancy (9.8%) remained relatively unchanged quarter-over-quarter. New supply slowed to a five-quarter low with three buildings (205,000 square feet (sf)) completed inTorontoWest – bringing the GTA three-quarter tally to 1.6 million square feet (msf). A further 5.4 msf (60% preleased) remains under construction, with 2.3 msf scheduled for delivery in 2016. Downtown’s positive quarterly performance is the result of transactions in every market segment.The ongoing relocation of tenants to recently completed developments in Downtown South andWest has created large blocks of backfill space in some of the Financial Core’s coveted AAA towers – including Brookfield Properties’BayWellingtonTower and Oxford Properties’TD CanadaTrustTower, which have not faced significant vacancy since being built in the early 1990s. Anticipating the next building cycle, renewals are prominent, including Royal Bank’s 456,000-sf long-term extension at Royal Bank Plaza. Preleasing for the 3.7 msf under construction downtown stands at 68%, with Bay Adelaide Centre – EastTower, OneYork Street, and DanielsWaterfrontWest each offering contiguous blocks of more than 170,000 sf. Interest remains from U.S. groups, as shared workspace conceptWeWork leased 65,000 sf at 230-240 Richmond St.W. Overall, downtown vacancy retreated 40 basis points (bps) to 6.2%, while availability declined 20 bps to 9%. In Midtown, a couple of long-standing big-block vacancies were leased. Teleperformance Canada, currently at 365 Bloor St. E., has reportedly inked a deal at 75 Eglinton Ave. E. (38,300 sf of formerThomas Cook space), while MasterCard will move its Canadian headquarters from 2 Bloor St.W. to 24,500 sf at 121 Bloor St. E. (former Ontario College ofTeachers space). In other news, Oxford Properties assumed leasing of Canada Square with the long-term goal of redeveloping the complex, and has also reportedly sold 2 Bloor St.W. (455,000 sf) and CumberlandTerrace to partners KingSett Capital and Greystone. Midtown vacancy slipped to 6.6% (-20 bps), but availability increased to 8.2% (+70 bps), attributed to space returning to the market on a direct basis in St. Clair and Bloor class B product, as well as class A sublet space in the Eglinton node. The suburban market is swinging from positive to negative growth each quarter, as tenants shuffle between buildings and nodes. Double-digit availability (14.3%), vacancy (13.5%) and a steady supply of new product are consistent factors. Banks’appetite for well-priced, large blocks of suburban space continues:TD’s 140,000-sf deal inToronto East last quarter was followed by Scotiabank’s 142,000 sf at 4715Tahoe Blvd. (former BlackBerry premises) in TorontoWest. Big renewals captured the headlines, including SNC-Lavalin (Nuclear) at 2251 and 2285 Speakman Dr. (215,000 sf) and Desjardins Insurance at 3 Robert Speck Pkwy. (190,000 sf) inTorontoWest, while AMD extended its lease at 1 CommerceValley Dr. E. (240,000 sf) inToronto East. 3RD 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 Q3'15 1,615,794 227,093 9.8% 11.6% 1.8% 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 Q3'15 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 Q3'15 1,615,794 227,093 9.8% 11.6% 1.8% 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 Q3'15 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. Q3-15 Asking Net Rent (Avg. $psf) Additional Costs (Avg. $psf) Downtown 20.68$ 17.72$ Midtown 17.93$ 18.88$ East 13.29$ 13.35$ North 16.70$ 16.37$ West 15.29$ 12.64$ GTA Overall 15.89$ 14.48$ $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 Q3-15 Downtown Midtown East North West GTA Overall Sublet Available (sq. ft.) 939,825 298,712 463,470 203,388 973,336 2,878,731 Sublet as % of Total Available 14% 23% 11% 18% 14% 14% Total Available 6,503,331 1,313,967 4,155,347 1,138,273 7,193,675 20,304,593 0% 5% 10% 15% 20% 25% 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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