The suburban office market outperformed the downtown and midtown markets in the Greater Toronto Area (GTA) in the last quarter, with 15 out of 23 new buildings now rising in the Toronto West node.
According to Bill Argeropoulos, principal and practice leader of research (Canada) for Avison Young, Toronto West experienced its best quarterly absorption result since 2012 with help from incoming tenants, such as TJX.
As outlined in the Q2 2015 Greater Toronto Area Office Market Report, Toronto West brought in 874,000 square feet of new supply in the Q2—the most since Q1 2009—making it the only node to realize new suburban stock for this year. Another 1.2 million square feet is underway.
Suburban transactions include PointClickCare, which is leasing the former Target Canada headquarters in Airport Corporate Centre, the expansion of Huawei Technologies and TD Bank leasing a 140,000-square-foot part of the former Amex campus in the Hwy. 404 and Steeles node.
Overall, 1.4 million square feet was completed in the GTA over the past six months. Another 5.7 million square feet remains under construction, two-thirds of which are downtown and satisfying U.S. tenants eager to grow in this market.
Also particular to downtown in the Q2 is a vacancy rate recorded at 7.2 per cent compared to an availability rate of 10.5 per cent. Meanwhile, the average additional rent per square foot for recently built high performance buildings is $24.36 compared to $31.90 for AAA and Bank Towers.
The report also states that the downtown market is holding strong despite tenants relocating to new towers, such as Marsh Canada’s move to the Bremner Tower. Class C and B buildings in the downtown east and King and Dufferin nodes are also driving demand.
A couple other notable assets include Allied Properties’ QRC West building and its King Portland Centre. Along with partner RioCan, Allied began preleasing the mixed-use LEED Platinum development at 620 King Street West.
In the financial core, Concert Properties is working on a boutique five-storey office building to be completed in 2017 as part of a mixed-use development at 20 Wellington Street East, while in the midtown Bloor node, Manulife Financial saved about 202,000 square feet of space by re-stacking its operations at 250 Bloor Street East.