The first quarter of 2016 saw positive results for The Greater Toronto Area (GTA) office leasing market, mainly due to downtown leasing. However, Airport-area nodes in Toronto West and Toronto East’s Hwy. 404 & Steeles and Duncan Mill nodes pushed the suburbs into a healthy Q1.
Avison Young’s GTA Office Market Report (Q1 2016) points out that renewals, expansions and relocations were part of this leasing activity in both existing and new product across the region, with almost 3 million square feet (msf) of deals finalized during Q1. This activity, along with lease transactions completed last year, translated into the fourth successive quarter of positive absorption, mainly in class-A buildings.
Overall, the GTA Q1 availability rate sits at 11.7 per cent, while vacancy held steady at 9.8 per cent. New supply was only 1.1 msf, while the majority of the 4.4 msf under construction is scheduled for completion by the end of 2017.
During Q1, Brookfield Office Properties’ Bay-Adelaide Centre, East Tower was completed, adding Deloitte as a main tenant. The next wave of large developments is not expected to begin delivering product before 2020-21.
However, construction on a smaller scale is on the horizon as landlords aim to bridge the gap between cycles, says the report. Residual blocks of backfill space from new developments will provide options during a construction calm, but are being leased up.