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Available office space in Toronto’s core has dropped to an eight-year low of 4%, despite a flood of new supply, according to Cushman & Wakefield. With 72M SF of office space, Toronto is the largest market in Canada, one of North America’s “most powerful growth markets,” said Stefan Teague, Cushman's GTA executive managing director and market leader. “We have a large pipeline of clients wanting to occupy significant space in proposed towers in 2017 and well beyond.” But companies looking for blocks larger than 300k SF are facing “no vacancy” signs, even in fringe markets surrounding the core.
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Firms seeking downtown space must wait for new developments, or change occupancy strategies. But projects delivering in 2017, like EY Tower, will bring little relief, Cushman noted; the project is 87% pre-leased. Some 2.1M SF of office has been absorbed in the past two years, an average of 300k SF/quarter. To compare, quarterly average absorption in the most recent five-year period was 157k SF. That shows how accelerated demand was in 2015-2016, particularly from tech, Big Data, e-commerce, software and information systems firms. “It’s pretty obvious we’ll hear about more building announcements in 2017,” Teague said.
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