4 TH QUARTER 2015
Greater Toronto Area Office Market Report
GREATER TORONTO AREA HISTORIC OFFICE
MARKET
TRENDS
GREATER TORONTO
AREA
HISTORIC OFFICE
MARKET TRENDS
TOTAL
TOTAL
CHANGE IN
AVAILABLE
OCCUPIED AREA VACANT RATE
TOTAL
TOTAL
CHANGE
IN
RATE (%)
(%)
(YTD) (SQ. FT.)
AVAILABLE
OCCUPIED AREA VACANT RATE
RATE (%)
(YTD) (SQ. FT.)
(%)
NEW SUPPLY
Market Overview
NEW SUPPLY
Fourth-quarter 2015 figures showed continued strength in the '00
office leasing
3,407,812
6,148,725
market in the Greater Toronto Area (GTA), led by a strong showing
'01 downtown.
2,879,872 A
-1,197,220
'00
3,407,812
6,148,725
less-than-stellar performance by Toronto West dragged the suburban
market
'02
3,390,524into -1,233,702
'01
2,879,872
-1,197,220
'03
550,040
-1,547,390
negative territory during the quarter and year overall. Class A'02buildings
outpaced
3,390,524
-1,233,702
'04
1,841,342
2,848,552
all asset categories as flight to quality continued region-wide.'03Overall,
GTA
550,040
-1,547,390
'05
1,687,599
3,876,835
availability declined 30 basis points (bps) between the third and
quarters
'04 fourth
1,841,342
2,848,552
'06
873,913
4,302,979
'05 million1,687,599
3,876,835
to end 2015 at 11.3% (-50 bps year-over-year) as more than 9.5
square
1,794,207
3,204,546
873,913
feet (msf) transacted during the year. Overall vacancy settled'06
at'079.7%, similar
to 4,302,979
'08
1,011,293
1,784,179
1,794,207
3,204,546
the previous quarter and one year ago. New construction has'07focused
landlords
4,755,533
593,343
'08 '09
1,011,293
1,784,179
on retaining tenants, who are enjoying multiple options and price
points.
New
1,520,727
1,153,346
'09 '10
4,755,533
593,343
office completions slowed compared to previous quarters, to'1095,000
square
'11
2,439,089
1,520,727
1,153,346
1,302,713
feet (sf), bringing the annual tally to 1.7 msf, of which 1.4 msf '11
was
in 2,439,089
'12 delivered
585,343
1,120,254
1,302,713
Toronto West. A further 5.5 msf (63% preleased) is under construction
GTA'12 '13
585,343
-846,622
1,120,254
1,683,952
-846,622
wide, equating to 3.1% of existing stock. The year ahead offers'13both
challenges
'14
975,667
1,683,952
2,382,040
975,667
2,382,040
'15 disruptive
and opportunities, as supply overhang, workplace strategies '14
and
1,710,534
553,481
YTD
technologies will test landlords and tenants.
1,615,794
227,093
Q3'15
spread
between
spread
Ava+Vac
between
Ava+Vac
6.8%
1.2%
M
M AA RR KK EE TT FF AA CC TT SS
5.6%
8.2%
9.9%
1.7%
5.6%
6.8%
1.2%
11.0%
12.2%
1.2%
8.2%
9.9%
1.7%
12.3%
13.3%
1.0%
11.0%
12.2%
1.2%
11.5%
12.5%
1.0%
12.3%
13.3%
1.0%
10.0%
11.2%
1.2%
11.5%
12.5%
1.0%
Number
of class A buildings
in the
7.8%
9.9%
2.1%
10.0%
11.2%
1.2%
Financial Core with >100,000 sf
6.8%
8.5%
1.7%
7.8%
9.9%
2.1%
10
3.7
of available space
Millions of square feet under
construction in Downtown Toronto
(75% preleased)
6.4%
6.8%
8.5%
8.5%
2.1%
1.7%
5.6%
8.7%
6.4%
10.7%
8.5%
2.0%
2.1%
8.7%
8.7%
10.6%
10.7%
1.9%
2.0%
8.7%
7.7%
10.6%
9.8%
2.1%
1.9%
7.9%
7.7%
9.3%
9.8%
1.4%
2.1%
9.6%
9.7%
9.8%
11.8%
11.3%
11.6%
Overall
Downtown9.3%
vacancy
vs.1.4%
9%
2.5%
7.9%
9.1%
11.6%
at the peak of the Great Recession
2.5%
2.2%
9.1%
11.6%
9.6%
11.8%
in Q2 2010
2.2%
1.6%
9.5+
Millions of square feet transacted
in 2015, with more than
5.5 msf Downtown
1.8%
Square Feet (000's)
Square Feet (000's)
Greater Toronto Area
Downtown posted its best quarterly result of 2015 with more than 443,000 sf of
Toronto
Area - All Classes
Historic Greater
Office Market
Trends
absorption, finishing the year in positive territory. Gains in occupied area were
Historic Office Market Trends - All Classes
7,000
14.0%
realized across all asset classes; however, class A buildings were the clear winners,
14.0%
7,000
led by the Downtown West, North and South nodes – largely attributed to the
6,000
12.0%
6,000
ongoing relocation of tenants to the market’s newest developments. The losers
12.0%
5,000
have been a handful of class A towers in the Financial Core, which currently
5,000
10.0%
4,000
10.0%
house some of the largest contiguous blocks of space. Though Core class A
4,000
8.0%
vacancy stood at 6% at year-end, availability was in double digits (11.6%). Overall,
3,000
8.0%
3,000
downtown availability and vacancy decreased between quarters, closing 2015
2,000
6.0%
at 8.6% and 5.6%, respectively. Downtown leasing transactions represented
2,000
6.0%
1,000
various industry and product types. Scotiabank inked a deal at 333 King St.
1,000
4.0%
4.0%
E. (72,000 sf of former Postmedia space), launching its new “Digital Factory”
0
0
to pursue innovations in tech and mobile banking, while Autodesk, a leader
2.0%
-1,000
2.0%
-1,000
in 3D digital software, leased 60,000 sf in phase 2 of MaRS Discovery District.
-2,000
0.0%
Elsewhere, Touchstone Institute is on the move from Midtown’s Bloor node to
0.0%
-2,000
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 YTD
145 Wellington St. W. (42,000 sf of former AIG space), while Ontario Telemedicine
Q3'15
New
Supply
Change
In Occupied
Vacancy
Availability
Network will relocate from Duncan Mill in Toronto East to 438 University Ave.
New
Supply
Change
In Occupied
AreaArea
Vacancy
RateRate
Availability
Rate Rate
(32,000 sf of former LoyaltyOne space). While there were no new construction
announcements, Ivanhoe Cambridge and Allied Properties REIT opened presentation centres showcasing Bay Park Centre and The WELL respectively.
Total Available/Vacant Rate (%)
Total Available/Vacant Rate (%)
Partnership. Performance.
A poor performance by Toronto West more than negated a decent showing by Toronto North and East, leaving the overall suburban market in negative
absorption territory for the year. Though the suburbs had their share of headline deals during the year, demand has not kept pace with consistent
deliveries of new product, mostly in Toronto West, which accounted for 97% of completions and 50% of under-construction space at year-end. Suburban
availability (14.3%) and vacancy (13.7%) rates mirrored those of one year earlier. Toronto North ended the quarter and year with single-digit availability
and vacancy, while Toronto West and East wallowed in double-digit territory. Despite its woes, investor interest in the suburbs has not waned as several
assets sold (30 & 38 Leek Crescent/95 Mural St., 2655 Bristol Circle and 155 Gordon Baker Rd.) or are currently for sale (Allstate Corporate Centre).
G G
R ER A
T T
E ER R TTOORROONNTT OO A
A
EA
A RR EE A
Availability Trend
MA
A RR KK EE TT S SUUMMMMAAR RY Y
M
Change in
Occupied Area
(000’s of sf)
Vacancy Trend
New Supply
(000’s of sf)
12 months
ago
3 months
ago
Current
Quarter
12 months
ago
3 months
ago
Current
Quarter
Current
Quarter
Year-toDate
Year-to-Date
Completions
Under
Construction
% Preleased
11.8%
11.6%
11.3%
9.6%
9.8%
9.7%
314
553
1,711
5,460
63%
C O M P ACROI MS POA N
L FE AL ES AI SNI N
G G OOPP TT II OONNS S F OF RO TRE NTAENNT SA N
R I SOO FN O
- TG ST A Available Space
G T A
Availability Rate
No. of
Bldgs.
Buildings with more
than 50,000 sf
Buildings with largest
contiguous available area
greater than 50,000 sf
Number of spaces
between 4,000 sf and
8,000 sf
Direct %
Sublet %
Total %
Downtown All Classes
402
32
23
152
7.2
1.4
8.6
Downtown Class A
115
30
22
69
8.5
1.4
9.9
Midtown All Classes
133
7
0
34
5.5
1.7
7.2
Midtown Class A
35
3
0
16
3.4
3.2
6.6
7
123
11.8
1.5
13.3
5
67
11.5
1.6
13.1
Office Space at Selected
Districts
Toronto East All Classes
304
20
Asking Net Rent Additional Costs
(Avg.
(Avg. $psf)
Toronto East Class
A $psf)
129
11
Q4-15
Downtown
$ 21.33 $ 18.01
Toronto North All Classes
111
8
Midtown
$ 18.69 $ 19.35
Q4-15
East
$ 13.2652$ 13.368
Toronto North Class
A
North
$ 16.88 $ Sublet
16.03 Available (sq. ft.)
Toronto West All Classes
West
$ 15.04489$ Sublet
12.5050as % of Total Available
GTA
Overall
$ 15.79239$ 14.3129
Toronto
West Class
A
Total Available
5
34
6.0
1.4
7.4
Downtown Midtown
East
North
West
GTA Overall
5
25
6.3
1.8
8.1
1,020,713
285,196
432,891
196,429
1,076,667
3,011,896
16%
25%
19% 14.6
14% 2.5
15%
23
18111%
17.1
16
6,211,215
GTA - Occupancy Costs - All Classes
GTA - Occupancy Costs - All Classes
1,016,879 11.67,433,943 2.6 19,805,91214.2
GTA - Sublet Availability - All Classes
GTA - Sublet Availability - All Classes
$45.00
$40.00
$35.00
$30.00
$25.00
$20.00
$15.00
$10.00
$5.00
$0.00
000’s sq. ft.
$p.s.f.
94
3,981,817
1,162,058
3,500
30%
3,000
25%
2,500
20%
2,000
15%
1,500
10%
1,000
5%
500
Downtown Midtown
East
Asking Net Rent (Avg. $psf )
Asking Net Rent (Avg. $psf)
North
West
0
GTA Overall
0%
Downtown Midtown
Additional Costs (Avg. $psf )
East
Sublet Available (sq. ft.)
Additional Costs (Avg. $psf)
Sublet Available (sq. ft.)
North
West
GTA Overall
Sublet as % of Total Available
Sublet as % of Total Available
E RR TOONR T
OO
NTO
G R E A TGERRE ATT O
A RA ER EAA SS I GGNNI FI IFCI ACNAT NT TR ATN RS AACNT SI OANCS T I O N S
Address
District
Tenant
Size
777 Bay St.
Downtown
Infrastructure Ontario
464,000 sf
175 Bloor St. E.
Midtown
EventMobi
20,000 sf
625 Cochrane Dr.
East
Parsons
51,200 sf
4101 Yonge St.
North
BlueCat Networks
29,000 sf
5150 Spectrum Way
West
Hewlett-Packard Canada
150,000 sf
For more information on this report, please contact Avison Young:
Bill Argeropoulos
416.673.4029
Principal & Practice Leader, Research, Canada
avisonyoung.com
© 2016 Avison Young Commercial Real Estate (Ontario) Inc., Brokerage
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 Avison Young.
Acknowledgement: Data for graphs, charts and tables used in this report are sourced from
Avison Young 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.
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