In Toronto vacancy rates rise along with new office towers
Office space vacancy rates in Toronto's downtown core are rising according to a report by Newmark Knight Frank Devencore. Class A and B vacancy rates are currently 6%. In Canada's major cities as a whole, the vacancy rate for Class A and B...
Office space vacancy rates in Toronto’s downtown core are rising according to a report by Newmark Knight Frank Devencore. Class A and B vacancy rates are currently 6%. In Canada’s major cities as a whole, the vacancy rate for Class A and B edged up from 4.5% to 5.9% in 2013.
When a vacancy rate in a particular building type or region is high, it means that the number of new construction projects in the sector could decline, affecting engineering and consultant firms’ business prospects.
Allan Schaffer of NKFD’s Toronto office said that the building boom of the last two years in the downtown “continues unabated.” It will creating something like 5 million square feet of additional state-of-the office space once towers currently under construction come on the market, he said. Meanwhile sublease space is opening up as companies are consolidating their office spaces or downsizing.
“As tenant options increase in downtown Toronto, the key question now is whether or not the rise in sublease space points to a waning of demand in the marketplace,” said Schaffer.
The vacancy rate in office buildings in the suburbs is even higher as 20 and 30-year old buildings start to age. The vacancy rate in the western outskirts of Toronto has risen from 12.7% to 14.2%. Frank Devencore of NKFD said: “Space is most abundant in the Airport East area along Airport Road where many of the buildings date from the 1970s and 1980s and have difficulty competing against the more modern and efficient buildings in the area that conform to LEED standards.”
The report notes that construction activity is high across the country, and “new towers are being built in virtually every city.”