The Greater Toronto Area Office and Industrial real estate markets continue to experience high demand and low vacancy rates, the benchmarks of a marketplace which has a solid foundation for continued health and prosperity, say the Colliers International Q2-2015 GTA Office and Industrial Market Reports.
“The GTA commercial real estate market remains the most vibrant and healthiest in Canada, if not in North America,” says John Arnoldi, executive managing director of Colliers International in Toronto. “Both the office and industrial markets are the most robust they have been in many years, with strong occupancies and high demand for more inventory, which are the classic combination of a commercial real estate market that is hitting on all cylinders.”
Colliers GTA Office Report
In the last calendar year, over 2.5 million square feet of new office space has come on-stream in the GTA, yet despite that, positive absorption in office space continues. Downtown Toronto continues to experience high demand, where vacancy rates have continued to decline and now sit at just 2.6 per cent, a significantly low percentage when compared to other major downtown North American office markets. As displayed in previous quarters, much of the demand in the downtown area is for newly built or renovated space, putting pressure on older Class AAA buildings to reinvent themselves to attract tenants.
“The well-recognized buildings of Toronto’s skyline such as the TD Centre, First Canadian Place, Commerce Court, Scotia Plaza and Brookfield Place, were all built in a 25-year span between 1966 and 1991, and they need to continually attract new tenants and can do so because of their marquee addresses,” adds Arnoldi. “However, the big blocks of available downtown space, 100,000 square feet and up, are in those buildings and with approximately 5 million square feet of new office space planned, under renovation or construction within the GTA, there could be large blocks of available space in some of these older Class AAA buildings.”
Colliers GTA Industrial Report
The Colliers report shows strong absorption numbers in GTA’s real estate market, with the overall market holding steady in Q2-2015. “The golden nugget in the GTA industrial market is without question the GTA West region, which is experiencing incredible growth in new inventory and where 89 per cent of properties under construction is taking place,” says Peter Garrigan, Colliers Vice President of Business Development in Toronto.
“GTA West areas such as Mississauga, Halton and Peel Regions are growing rapidly and experiencing a continuous demand for large industrial facilities,” he adds.
“New inventory and supply is entering the market, especially in GTA West and central regions, and this will continue to be fuelled by the Spring Federal Budget, which called for an aggressive growth in the manufacturing sector offering an accelerated capital cost allowance and a $100 million fund reserved for the auto manufacturing sector in Canada. The fund from the government may help spur manufacturing activity but not necessarily lead to an increase in inventory. If increase manufacturing activity occurs they will occupy smaller blocks of space typically 50k below. New large industrial space caters to the warehouse/distribution sector.”