Delivery of new office space in Toronto slowed significantly last year: 286k SF versus 1.5M in 2014, Morguard research director Keith Reading tells us. Activity will pick up in 2016, with 2.3M SF coming online, plus an additional 4M SF slated for the next four years. But Keith notes the infusion comes amid “lots of risk in the global economy.” If Toronto's economy grows as forecast, much of that new space should be absorbed. “If there’s anything less than strong demand, however, the resilience we’ve seen in recent years will be definitely tested.”

Expect "a lot of wait and see from companies," adds Keith, "and that will eat away at leasing demand.” He's watching Brookfield Properties' Bay Adelaide Centre East, a 1M SF tower that's 68% pre-leased, and HOOPP and Menkes Developments’ One York St, an 800k SF tower with 67% pre-leased. “Those are fairly big chunks left over.” But availability of this new space will hit outdated competitors hardest, says Keith. “Tenants will say, look, Mr. Older Building Landlord, give me a bigger discount on my rent because I can just go to a brand-new building for reasonable rates."