Greater Toronto Area Office Market is Working its Way Back to Pre-Credit Crisis Form
August 5, 2010
Despite continued rising vacancy levels in the Greater Toronto Area (GTA) office market, strengthening business confidence has led to a surge in tenant leasing activity – especially in Downtown Toronto, according to Avison Young’s recently-released Mid-Year 2010 Greater Toronto Area Office Market Report.
“As the second quarter of 2010 drew to a close, the GTA office vacancy rate (physically unoccupied space) reached 11.2 per cent, up 60 basis points from 10.6 per cent in the first quarter of 2010,” says Bill Argeropoulos, Vice President and Director of Research (Canada) for Avison Young. “This compares to 10.4 per cent at year-end 2009 and 9.6 per cent at mid-year 2009. In contrast, the availability rate (space marketed for lease) held firm for the consecutive quarter, currently at 11.7 per cent – a sign that the market is starting to stabilize.
“The increase in business confidence is certainly evident in the number of tenant leasing assignments circulating the marketplace. Our research shows a notable jump in tenant activity in Downtown Toronto from a year ago to now more than 3 million square feet.”
According the report, the downtown market continues to work its way through nearly 4 million square feet of new office product and a stubborn sublet market, which accounts for 15 per cent of the total office space available for lease in downtown buildings. Downtown vacancy entered double-digit territory for the first time in five years, reaching 10.3 per cent at mid-year 2010.
Outside of the downtown market, and already in double digits, vacancy in Toronto’s suburbs climbed to 12.5 per cent. Apart from 744,000 square feet under construction, predominantly in GTA West, speculative development is virtually non-existent as the market struggles to show signs of a sustainable recovery.
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