GTA developers, landlords and businesses being “driven” to locate near rapid transit: Colliers
Colliers International’s Report on GTA Rapid Public Transit Infrastructure finds a relationship between the success of commercial real estate and its proximity to rapid transit, as businesses are now demanding their offices be close to accessible, rapid public transit systems.
“Simply put, the message to developers, landlords and businesses is very clear,” says John Arnoldi, Colliers International’s director in Toronto. “The GTA office markets with more than 60 per cent of their total office space within 400 metres or walking distance of rapid transit have a higher average rental rate and lower average vacancy rates than the rest of the GTA. Employees have spoken: they want to work within walking distance of where they can take transit to – they no longer wish to drive.”
The Colliers report was an extensive analysis of office leasing and transportation within the GTA. This report presented initial findings of Colliers’ larger analysis of the unique relationships that exist between the current/future rapid public transportation infrastructure within the GTA and the commercial real estate industry. Findings predict t future transit projects could increase competition within the office leasing and investment landscape in the GTA, particularly in the untapped GTA West (Airport Corporate Centre) and around the Don Mills/Eglinton area.
Results show office buildings within walking distance to rapid transit have continually experienced steady positive absorption, and office markets near rapid transit are seeing higher asking rental rates, lower vacancy rates and faster pre-leasing cycles. Most important to building owners is office tenants’ willingness to pay higher rents for office space close to rapid transit. This is a notable bottom line reality owners and landlords must begin to pay attention to in the next decade.
“The current transit infrastructure within the GTA is over capacity, with daily average commutes now more than 65 minutes. Employees have simply had enough of sitting in cars that go nowhere,” adds Arnoldi. “The region’s highway infrastructure is especially overburdened with little to no room to grow, placing even more importance on the usage and expansion of rapid transit. With various levels of government focused on expanding the GTA’s rapid transit capabilities, this represents an important opportunity, and an absolute priority, to maintain one of North America’s most competitive and robust commercial office markets.”
This Colliers report also shows while office space that is accessible to rapid public transit is performing well, partially because demand is outpacing supply, , the message to developers is that office leasing tenants and commercial real estate purchasers are continually increasing their demand for properties within the GTA that are close to rapid public transit. With two rapid transit projects under construction and five more proposed, competition in attracting companies within different office markets should increase, as the supply of rapid transit will become available in markets currently without access.