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A new midyear office market report has characterized Toronto as a "tale of two distinct markets."
Toronto is currently defined by its “robust and landlord-favouring downtown and the inconsistent and tenant-friendly suburbs," according to the Avison Young Mid-Year 2017 North America and Europe Office Market Report.
The report found almost 3M SF of office development was completed in Toronto in the year ending in June. There was 6.4M SF under construction, with 5.3M SF of that downtown. GTA office vacancy rates stayed low at 7.2%, a six-year low, and were historically low downtown at 3.3%.
Downtown remained the Toronto market catalyst, with “robust demand, diminishing large blocks of contiguous, available space, rising rental rates, and continuous construction," the report said.
Of the many big downtown developments and leasing announcements in the first half of 2017, the report pointed to CIBC Square and its $2B, 2.9M SF, two-tower complex on Bay Street, and 16 York, Cadillac Fairview’s proposed $47M, 879K SF office tower.
Although Toronto suburban office space declined to 11.1% (down 80 basis points year-to-year), the report concluded tenants still enjoy ample space options at favourable rental rates.
The report said transit-oriented developments continue to gain suburban traction, with upcoming developments including a much-discussed, massive Pearson Airport transit hub.
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