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Toronto office market report q1 2016

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Toronto office market report q1 2016

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Toronto office market report q1 2016

  1. 1. Research & Forecast Report GREATER TORONTO AREA OFFICE MARKET First Quarter 2016
  2. 2. 2 Research & Forecast Report | Q1 2016 | Greater Toronto Area / Office | Colliers International Market Summaries GTA Market Overview.....................................................................................................3 Downtown................................................................................................................4 Midtown...................................................................................................................5 Central North...........................................................................................................6 Central East............................................................................................................. 7 GTA East..................................................................................................................8 GTA North................................................................................................................9 GTA West............................................................................................................... 10 Glossary............................................................................................................................... 11 Table of Contents
  3. 3. 3Research & Forecast Report | Q1 2016 | Greater Toronto Area / Office | Colliers International GTA Market Overview Market Overview The overall vacancy rate in the Greater Toronto Area (GTA) office market in Q1 2016 remained stable at 4.8 percent, while the availability rate increased slightly to 9.8 percent. Most office markets saw their vacancy rates remain relatively unchanged as the GTA office market continues to be steady. With the GTA office market remaining firm, rental rates throughout the region continue to increase. Of the available space on the market in Q1 2016, the average asking net rent increased to $18.68 from $17.19 in Q4 2015. The rent is partially being driven up by the high demand and low supply for quality space within certain submarkets such as Downtown East, Downtown West, Yonge-Bloor and Yonge-St. Clair. The suburban GTA West office market is also experiencing an increase in rental rates as more companies are demanding higher quality office space. Almost five million square feet of office space is currently under construction, with about two million square feet of space set to be delivered throughout the year. Many of the new office buildings that have been recently completed or are set to be completed within the year have been fully or almost fully leased, meaning that a large amount of space is available but currently occupied. A test of the market will be whether this space is leased or becomes vacant in 2016. Investment Market The Toronto investment market saw a decrease in transactions during Q1 2016. According to RealNet data, there were $452 million in sales and only 39 total transactions during Q1. This decreased from 69 sales totaling $2.1 billion in the previous quarter. According to Real Capital Analytics, although the average sale price per square foot was the largest in Q1 2016 since Q3 2014, Toronto saw its lowest quarterly sales volume since Q1 2015. The GTA had a smaller number of transactions over the past year due to limited supply of quality assets. The largest property sold in Q1 2016 was the Allstate Corporate Centre in the GTA North, purchased by Crown Realty Partners and Crestpoint Real Estate Investments Ltd. for $148,550,000. Overall, GTA North was the market with the largest volume of sales in Q1 2016 ($165 million). The GTA West and Midtown markets also had more than $100 million in sales ($126 million and $136 million respectively). Market Indicators Relative to prior period Market Q4 2015 Market Q1 2016 Market Q2 2016* Trend VACANCY RATE 4.8% 4.8% NET ABSORPTION (570,806) (187,214) AVAILABILITY RATE 9.2% 9.8% AVERAGE ASKING NET RENT $17.79 $18.68 *Projected Occupier Demand The financial services sector continues to lead the demand for office space primarily in the Downtown market and specifically in the Downtown South, Financial Core and Downtown West submarkets. Financial services tenants typically occupy Class AAA and Class A office buildings, the current availability rate in these office buildings ranges between 8.2 percent and 11.2 percent, which will facilitate the process of meeting the occupier demands. The engineering sector comes next in the demand for office space in both the GTA West and the GTA North markets, clustered in areas with other companies of the same industry. Q1 2016 – 2,106,000 Square Feet Financial Services Engineering Technology / Software Technology / Software / Internet Banking Transportation Retail Trade Media Entertainment 44% 25% 11% 5% 4% 4% 3% 2% 2% Finan Engin Techn Techn Banki Entert Trans Retail Media Historical Performance and Forecast (600,000) (400,000) (200,000) - 200,000 400,000 600,000 800,000 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 Net Absorption (SF) New Supply (SF) Vacancy Rate (%) 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% -1,000,000 -500,000 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 20151Q 20152Q 20153Q 20154Q 20161Q 20162Q 20163Q 20164Q 2017Q1
  4. 4. 4 Research & Forecast Report | Q1 2016 | Greater Toronto Area / Office | Colliers International Downtown The overall vacancy rate within the Downtown office market was stable this quarter and remains at 2.5 percent. However, the availability rate increased in Q1 2016 to 9.8 percent from 9.2 percent in Q4 2015. The increase in availability rate is partially due to buildings owners listing office space that is still occupied, but will be vacated by numerous tenants that are set to move to new buildings. As the success of newly/under construction buildings continues within the downtown, the availability rate should continue to increase. A test of the market will be whether the available space will continue to be leased before it ever becomes vacant. While rents increased slightly in the Downtown office market, rental rates within the Downtown East and West submarkets continue to rise at a faster pace than the rest of the market. Demand remains high and supply low for space in Downtown East and West, leading to the higher rents. Trends >> Gross rental rates within Downtown East and West in Q1 2016 were $45.09 and $40.94 respectively. >> The overall Downtown average gross rental rate for all asset classes is $54.46 in Q1 2016. >> Approximately two million square feet of office space could be delivered to the Downtown market throughout 2016 – much of which is already pre-leased. Historical Performance and Forecast Notable Lease Transactions TENANT NAME - ADDRESS TYPE APPROXIMATE SIZE (SF) 1. Fidelity Investments - 483 Bay Street Renewal 140,000 2. Scotiabank - 150 King Street West Headlease 52,000 3. Aviva - 100 King St W Headlease 50,000 Summary Statistics Q1 2016 Regional Office Market Q4 2015 Q1 2016 Trend Office Inventory 65,165,547 65,165,547 Net Absorption (301,228) (44,384) Vacancy Rate 2.5% 2.5% Availability Rate 7.1% 8.4% Average Asking Net Rent $28.16 $28.63 Notable Lease Notable Sale New Supply Upcoming New Supply ADDRESS CLASS FLOORS SIZE (SF) DEVELOPER COMPLETION STATUS 7. 22 Adelaide Street West AAA 44 1,020,000 Brookfield Financial Real Estate Group Q1 2016 Under Construction 8. 351 King Street East A 17 500,000 First Gulf Q2 2016 Under Construction 9. 1 York Street A 35 800,000 HOOPP / Menkes Q3 2016 Under Construction 10. 100 Adelaide Street West AAA 40 905,722 Oxford Properties Group Inc. Q2 2017 Under Construction 11. 130 Queens Quay East A 178,300 The Daniels Corporation Q2 2019 Under Construction Notable Sale Transactions PURCHASER - ADDRESS PRICE APPROXIMATE SIZE (SF) 4. 103 Church Street $7,000,000 25,321 5. 84 Richmond Street East $5,500,000 12,258 6. 132 Jarvis Street $1,800,000 2,000 TORONTO Union Dundas Bloor / YongeBay Castlefrank Wellesley Queen’s Park 6 Carlton StCollege St Dundas St Queen St King St SpadinaAve UniversityAve YongeSt ParliamentSt Bloor St Gardiner Expwy 1 5710 11 4 2 3 8 9 Lake Ontario (600,000) (400,000) (200,000) - 200,000 400,000 600,000 800,000 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 Net Absorption (SF) New Supply (SF) Vacancy Rate (%) 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% -500,000 0 500,000 1,000,000 1,500,000 2,000,000 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 20151Q 20152Q 20153Q 20154Q 20161Q 20162Q 20163Q 20164Q 2017Q1 Net Absorption New Supply Vacancy Rate %
  5. 5. 5Research & Forecast Report | Q1 2016 | Greater Toronto Area / Office | Colliers International Midtown The overall vacancy rate in the Midtown market remained almost unchanged at 2.3 percent. While the market didn’t see much change, asking rental rates continue to increase quarter over quarter. Tenant demand for office space within the Yonge-Bloor, Yonge-St Clair and Yonge-Eglinton markets is rising, while the vacancy rate remains less than 2.5 percent for all of these submarkets. The Midtown availability rate also remains low at 6.1 percent. Trends >> The Midtown market had the second largest sales transaction volume of any GTA market in Q1 2016 as about $140 million of office space was sold. >> The two largest office property sales in the Midtown this quarter were the sale of 1200 Bay Street at $86,750,000 and the sale of 1 St. Clair Avenue East for $35,000,000. Summary Statistics Q1 2016 Regional Office Market Q4 2015 Q1 2016 Trend Office Inventory 15,065,008 15,065,008 Net Absorption (113,391) 14,811 Vacancy Rate 2.4% 2.3% Availability Rate 6.0% 6.1% Average Asking Net Rent $19.24 $21.14 Notable Lease Notable Sale New Supply Upcoming New Supply ADDRESS CLASS FLOORS SIZE (SF) DEVELOPER COMPLETION STATUS 11. 135 Yorkville Avenue A 11 50,000 Camrost Felcorp Q3 2016 Planned Notable Sale Transactions PURCHASER - ADDRESS PRICE APPROXIMATE SIZE (SF) 5. 1200 Bay Street $86,750,000 96,284 6. 1 St. Clair Avenue East $35,000,000 69,132 7. 96 - 100 Ossington Avenue $9,100,000 17,000 8. 1376 Bayview Avenue $3,300,000 7,245 9. 1905 Davenport Road $1,590,000 5,000 10. 61 Saint Nicholas Street $1,250,000 2,176 Bloor St Dundas St Queen St Eglinton Ave LansdowneAve YongeSt BayviewAve DufferinSt Lawrence Ave Gardiner Expwy 6 TORONTO 11 1 2 3 4 9 8 7 510 Notable Lease Transactions TENANT NAME - ADDRESS TYPE APPROXIMATE SIZE (SF) 1. Teleperformance - 75 Eglinton Aveneue East Headlease 80,000 2. Toronto Transit Commission - 250 Bloor Street East Headlease 66,000 3. Crosslinx Transit Solutions - 90 Eglinton Evanue East Headlease 30,000 4. Medgate - 250 Bloor Street East Headlease 22,000Historical Performance and Forecast (600,000) (400,000) (200,000) - 200,000 400,000 600,000 800,000 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 Net Absorption (SF) New Supply (SF) Vacancy Rate (%) 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% -150,000 -100,000 -50,000 0 50,000 100,000 150,000 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 20151Q 20152Q 20153Q 20154Q 20161Q 20162Q 20163Q 20164Q 2017Q1 Net Absorption New Supply Vacancy Rate %
  6. 6. 6 Research & Forecast Report | Q1 2016 | Greater Toronto Area / Office | Colliers International Central North The Central North market experienced a negative absorption of 10,918 square feet this quarter. Despite the negative absorption recorded within the market, the North Yonge Corridor submarket recorded a positive absorption, primarily in Class A buildings. Office condos in this market are the most active within the city of Toronto, recording more sales over the past few years and spurring new office condo developments in the near future. The average price per square foot of an office condo in a Class A building ranges between low $600s and low $700s, depending on many other factors such as size and configurations. Trends >> Average net asking rates rose by five cents from Q4 2015 to reach $18.23 in Q1 2016. >> The vacancy rate slightly increased to 2.8 percent this quarter but is still considered low. Summary Statistics Q1 2016 Regional Office Market Q4 2015 Q1 2016 Trend Office Inventory 10,981,677 10,981,677 Net Absorption (43,998) (10,918) Vacancy Rate 2.7% 2.8% Availability Rate 6.5% 7.8% Average Asking Net Rent $18.18 $18.23 Notable Lease Notable Sale New Supply Upcoming New Supply ADDRESS CLASS FLOORS SIZE (SF) DEVELOPER COMPLETION STATUS 5. 4800 Yonge Street A 25 393,000 Oxford Properties Group Q4 2016 Planned 6. 4050 Yonge Street 7 367,000 Build Toronto Inc. Q4 2016 Planned Notable Lease Transactions TENANT NAME - ADDRESS TYPE APPROXIMATE SIZE (SF) 1. Crosslinx - 4711 Yonge Street Headlease 50,000 2. IBM - 5775 Yonge Street Headlease 17,000 3 4 Sheppard Ave Highway 401 Lawrence Ave Finch Ave YongeSt BayviewAve KeeleSt Steeles Ave Eglinton Ave BathurstSt York University 5 6 TORONTO VAUGHAN Lawrence Sheppard Finch Downsview Lawrence West Eglinton West Eglinton 1 2 Historical Performance and Forecast (600,000) (400,000) (200,000) - 200,000 400,000 600,000 800,000 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 Net Absorption (SF) New Supply (SF) Vacancy Rate (%) Notable Sale Transactions PURCHASER - ADDRESS PRICE APPROXIMATE SIZE (SF) 3. 1940 Avenue Road $1,800,000 2,500 4. 649 Sheppard Avenue West $1,335,000 2,305 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% -250,000 -200,000 -150,000 -100,000 -50,000 0 50,000 100,000 150,000 200,000 250,000 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 20151Q 20152Q 20153Q 20154Q 20161Q 20162Q 20163Q 20164Q 2017Q1 Net Absorption New Supply Vacancy Rate %
  7. 7. 7Research & Forecast Report | Q1 2016 | Greater Toronto Area / Office | Colliers International GTA North Crown Realty Partners and Crestpoint Real Estate Investments Ltd. purchased Allstate Corporate Centre in Markham for $148.5 million, recording the largest office sale in Q1 2016 across the GTA. The sale comprised four multi-tenant office buildings and one parking garage. On the leasing side, the GTA North market posted a positive absorption of 37,932 square feet and an increased average asking net rent rate by 35 cents from last quarter to reach $16.37 per square foot in Q1 2016. Trends >> The GTA North market had 37 percent of the office space sold within the GTA this quarter. >> The vacancy rate dropped by 0.5 percent since last quarter to reach 6.5 percent in Q1 2016. Notable Lease Transactions TENANT NAME - ADDRESS TYPE APPROXIMATE SIZE (SF) 1. Epson - 185 Renfrew Drive Renewal 20,000 2. GMC Software Technology Inc. - 675 Cochrane Drive Headlease 18,574 3. DealerFX - 80 Tiverton Court Headlease 17,595 Summary Statistics Q1 2016 Regional Office Market Q4 2015 Q1 2016 Trend Office Inventory 12,400,038 12,400,038 Net Absorption (77,647) 37,932 Vacancy Rate 7.0% 6.5% Availability Rate 11.8% 10.2% Average Asking Net Rent $16.02 $16.37 Notable Lease Notable Sale New Supply Upcoming New Supply ADDRESS CLASS FLOORS SIZE (SF) DEVELOPER COMPLETION STATUS 8. Millway Rd. at Apple Mill Rd A 14 350,000 Calloway REIT, SmartCentres Q2 2016 Under Construction 9. 7777 Weston Road A 8 136,000 Liberty Developments Q3 2016 Planned 10. 2833 16th Avenue A 60 9,000,000 Cadillac Fairview Planned 11. 1555 16th Avenue 7 120,650 Investors Group Planned Newmarket Richmond Hill King City Highway 407 Aurora RdWellington St Highway404 YongeSt Stouffville Rd WardenAve Highway400 Steeles Ave King Rd Highway27 Davis Dr 10 VAUGHAN RICHMOND HILL AURORA 9 8 11 5 6 71 3 24 Notable Sale Transactions PURCHASER - ADDRESS PRICE APPROXIMATE SIZE (SF) 4. Allstate Corporate Centre $148,550,000 575,969 5. 3565 King Road $2,415,000 10,000 6. 10265 Yonge Street $2,232,500 8,000 7. 8980 Woodbine Avenue $2,220,000 6,800 Historical Performance and Forecast (600,000) (400,000) (200,000) - 200,000 400,000 600,000 800,000 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 Net Absorption (SF) New Supply (SF) Vacancy Rate (%) 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% -200,000 -100,000 0 100,000 200,000 300,000 400,000 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 20151Q 20152Q 20153Q 20154Q 20161Q 20162Q 20163Q 20164Q 2017Q1 Net Absorption New Supply Vacancy Rate %
  8. 8. 8 Research & Forecast Report | Q1 2016 | Greater Toronto Area / Office | Colliers International Central East The office leasing activity in the Central East market was not entirely robust during the first quarter of 2016 with a few small to mid-sized office tenant movements in this quarter and almost no change in absorption. However, the availability rate is at 10.8 percent and with the current availability of big blocks of office space in the Central East market, it is expected to see more leasing activity during 2016. Trends >> Average asking net rental rates slightly increased to $12.88 per square foot. >> No sale activity was recorded in the Central East market during Q1 2016. Notable Lease Transactions TENANT NAME - ADDRESS TYPE APPROXIMATE SIZE (SF) 1. Capital One - 255 Consumers Road Headlease 42,584 2. Cmictrics - 340 Ferrier Street Sublease 14,278 Summary Statistics Q1 2016 Regional Office Market Q4 2015 Q1 2016 Trend Office Inventory 14,958,978 14,958,978 Net Absorption (103,622) (169) Vacancy Rate 5.5% 5.2% Availability Rate 9.9% 10.8% Average Asking Net Rent $12.79 $12.88 Notable Lease Notable Sale New Supply Upcoming New Supply ADDRESS CLASS FLOORS SIZE (SF) DEVELOPER COMPLETION STATUS 3. 3377 Steeles Avenue East A 6 280,000 Bentall Real Estate Services Planned 4. 101 Gordon Baker Road A 12 250,000 Osmington Inc. Planned Highway 407 Eglinton Ave Finch Ave Highway404 YongeSt VictoriaParkAve KennedyAve Sheppard Ave Steeles Ave Highway 401 MarkhamRd KeeleSt 3 SCARBOROUGH TORONTO Finch Kennedy Union Lake Ontario 2 4 1 3 Historical Performance and Forecast (600,000) (400,000) (200,000) - 200,000 400,000 600,000 800,000 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 Net Absorption (SF) New Supply (SF) Vacancy Rate (%) 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% -200,000 -150,000 -100,000 -50,000 0 50,000 100,000 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 20151Q 20152Q 20153Q 20154Q 20161Q 20162Q 20163Q 20164Q 2017Q1 Net Absorption New Supply Vacancy Rate %
  9. 9. 9Research & Forecast Report | Q1 2016 | Greater Toronto Area / Office | Colliers International GTA East Positive absorption took place in the GTA East market this quarter, primarily in Class B buildings where rental rates are affordable, recording an average net asking rate of $9.33. As a result of this positive absorption, vacancy rate slightly decreased to 5.4 percent in Q1 2016. Trends >> Class A average net asking rates increased to $12.36 per square foot. >> The current availability rate is 12.8 percent, broken down evenly between Class A and Class B office buildings. Summary Statistics Q1 2016 Regional Office Market Q4 2015 Q1 2016 Trend Office Inventory 6,095,990 6,095,990 Net Absorption 56,623 10,342 Vacancy Rate 5.5% 5.4% Availability Rate 9.7% 12.8% Average Asking Net Rent $11.29 $12.36 Notable Lease Notable Sale New Supply Upcoming New Supply ADDRESS CLASS FLOORS SIZE (SF) DEVELOPER COMPLETION STATUS 2. 65 Bayly Street West 2 31,500 Medallion Corporation Q1 2016 Under Construction 3. 400 Consilium Place A 15 375000 (900,000 in 3 towers) Kevric Planned Taunton Rd Kingston Rd Highway 407 BrockRd Sheppard Ave Steeles Ave Highway 40 York&DurhamLine Scarborough Town Centre Stouffville Pickering Osha Markham 3 2 TORONTO OSHAWA PICKERING1 Lake Ontario Historical Performance and Forecast (600,000) (400,000) (200,000) - 200,000 400,000 600,000 800,000 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 Net Absorption (SF) New Supply (SF) Vacancy Rate (%) Notable Lease Transactions TENANT NAME - ADDRESS TYPE APPROXIMATE SIZE (SF) 1. Regus - 3660 Midland Avenue Headlease 11,828 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% -140,000 -120,000 -100,000 -80,000 -60,000 -40,000 -20,000 0 20,000 40,000 60,000 80,000 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 20151Q 20152Q 20153Q 20154Q 20161Q 20162Q 20163Q 20164Q 2017Q1 Net Absorption New Supply Vacancy Rate %
  10. 10. 10 Research & Forecast Report | Q1 2016 | Greater Toronto Area / Office | Colliers International GTA West The GTA West office market was mostly stagnant throughout Q1 2016 as it relates to key indicators such as vacancy rates and absorption figures. Some of the highlights included some large office renewals, the largest being Desjardins General Insurance Group at 3 Robert Speck Parkway within Mississauga City Centre. With just over 536,000 SF of office space under construction or being delivered in 2016, we can expect tenant inducements to continue to rise as landlords compete for tenancies. Another continuing trend in the GTA West which is largely due to increased occupancy costs is tenant densification. Tenants are continuing to demand higher quality in the GTA West that is near amenities and transit. The demand for this type of office space will continue throughout 2016. Trends >> The demand for newer space in the GTA West should continue as the flight to quality keeps driving new development. The end of Q1 saw the delivery of two new office buildings and we will likely see another 250,000 SF of new office space delivered by the end of 2016. >> Numerous office property sale transactions took place in the GTA West in Q1 2016 as REITS and pension funds continue to be the most active. Sales in the GTA West totaled about $125,000,000 with the average price per SF being around $200. Summary Statistics Q1 2016 Regional Office Market Q4 2015 Q1 2016 Trend Office Inventory 39,848,067 39,848,067 Net Absorption 12,457 (194,828) Vacancy Rate 9.2% 9.5% Availability Rate 13.2% 13.1% Average Asking Net Rent $15.04 $15.98 Notable Lease Notable Sale New Supply Upcoming New Supply ADDRESS CLASS FLOORS SIZE (SF) DEVELOPER COMPLETION STATUS 10. 255 Longside Drive B 1 70,000 NC Warehouse Inc. Q2 2016 Under Construction 11. 2476 Argentia Road A 4 100,000 Sunlife Assurance Company of Canada Q2 2016 Under Construction 12. 2727 Meadowpine Boulevard A 7 150,000 Carttera Private Equities Inc. Q1 2017 Under Construction 13. 610 Chartwell Road A 4 104,000 First Gulf Q3 2017 Under Construction Notable Sale Transactions PURCHASER - ADDRESS PRICE APPROXIMATE SIZE (SF) 4. 1100 Burloak Drive $19,020,442 124,116 5. 5420 North Service Road $18,793,558 134,757 6. 151 City Centre Drive $15,000,000 79,259 7. 5575 North Service Road $13,898,976 92,000 8. 5515 North Service Road $13,037,024 84,570 9. 200 Matheson Boulevard West & 5950 Avebury Road $12,100,000 52,112 Kipling Georgetown Milton Lake Ontario QEW Highway 407 Highway 403 hwy427 Highway10 Highway 401 BRAMPTON 12 13 10 8 11 3 12 TORONTO9 OAKVILLE 6 MISSISSAUGA 54 7 Historical Performance and Forecast (600,000) (400,000) (200,000) - 200,000 400,000 600,000 800,000 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 Net Absorption (SF) New Supply (SF) Vacancy Rate (%) Notable Lease Transactions TENANT NAME - ADDRESS TYPE APPROXIMATE SIZE (SF) 1. Desjardins General Insurance Group - 3 Robert Speck Parkway Renewal 260,261 2. Simcore - 1 Robert Spec Parkway Headlease 75,000 3. Shred-it - 1383 North Service Road Headlease 47,000 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% -600,000 -400,000 -200,000 0 200,000 400,000 600,000 800,000 1,000,000 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 20151Q 20152Q 20153Q 20154Q 20161Q 20162Q 20163Q 20164Q 2017Q1 Net Absorption New Supply Vacancy Rate
  11. 11. 11Research & Forecast Report | Q1 2016 | Greater Toronto Area / Office | Colliers International Glossary Weighted Average Asking Net Rent: The dollar amount requested by landlords for an available space, expressed as an average based on the weight of available space. Availability: The total amount of space that is currently being marketed as available for lease or sublease at the end of the quarter. It includes space that is available, regardless of whether the space is vacant or occupied. Net Absorption: The net absorption in available space in a given market between the current quarter and the previous quarter. Direct Availability: Space that is being offered for lease directly from the landlord or owner of a building, not space by another tenant in the building trying to sublet a space that has already been leased. Sublease Availability: Sublet space that is available for sublease by a tenant to another lessee for a term equal to or shorter than that held by the tenant under its original lease with the landlord. Under Construction: Buildings where actual ground breaking has occurred (site excavation or foundation poured) and construction is ongoing (not abandoned or discontinued) but for which a certificate of occupancy has not yet been issued. New Supply: Total square footage with completed construction, where all that remains is the installation of tenant finishes. Days on the Market (DOM): How many days an available industrial property has been on the market for. GTA Central: Includes East York, Etobicoke, North York, Scarborough, Toronto and York. GTA East: Includes Ajax, Oshawa, Pickering, and Whitby. GTA North: Includes Aurora, Markham, Newmarket, Richmond Hill, Vaughan and Whitchurch-Stouffville. GTA West: Includes Brampton, Burlington, Caledon, Milton, Mississauga and Oakville. GTA Southwest: Includes Hamilton and Stoney Creek. Forecast Assumptions & Terminology Absorption was calculated using moving averages of historical absorption data and supplemented with incoming new speculative and build-to-suit developments. Colliers International has adopted NAIOP’s terms and definitions which is reflected in this glossary and report.
  12. 12. Copyright © 2015 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. About Colliers International Group Inc. Colliers International Group Inc. is a global leader in commercial real estate services, with more than 16,300 professionals operating out of 502 offices in 67 countries. Colliers International delivers a full range of services to real estate occupiers, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. In 2014 the firm handled $97 billion in total transaction value for 84,600 leases and sales. Colliers manages more than 1.7 billion square feet of commercial properties. Colliers International Group Inc. generates more than US$2.3 billion in annual revenues. With significant insider ownership and an experienced management team, Colliers International has a long-term track record of creating value and superior returns for shareholders – previously under the ownership of FirstService, and as of June 2015, continuously as an independently owned company. The common shares of Colliers International Group Inc. trade on the NASDAQ under the symbol “CIGI” and on the Toronto Stock Exchange under the symbol “CIG”. collierscanada.com 502 offices in 67 countries on 6 continents United States: 140 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108 $2.3 billion in annual revenue 1.7 billion square feet under management 16,300 professionals and staff MARKET CONTACT: John Arnoldi Executive Managing Director | Toronto Brokerage DIRECT: +1 416 643 3733 john.arnoldi@colliers.com REGIONAL AUTHORS: Shawn Gilligan Senior Analyst | Toronto DIRECT: +1 (416) 607 4325 shawn.gilligan@colliers.com Norhan Mansour Market Intelligence Coordinator | Toronto DIRECT: +1 (416) 791 7264 norhan.mansour@colliers.com Tomi Arthur Marketing & Market Intelligence Coordinator | Toronto tomi.arthur@colliers.com Colliers International | Toronto One Queen Street East, Suite 2200 Toronto, ON | Canada +1 416 777 2200

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