The flight to quality in the Greater Toronto Area (GTA) has continued into the third quarter of 2015, as demand is focused on Class A office space.
According to Avision Young’s Greater Toronto Office Market Report Q3, the downtown and midtown markets have added to the area’s expansion, while the suburban market contracted.
Based on research lead by Bill Argeropoulos, principal and practice lead of research for Avison Young (Canada), the GTA availability rate is 11.6 per cent, while the vacancy rate sits at 9,8 per cent, which is not much different from the last two quarters. New supply slowed to a five-quarter low, bringing the GTA three-quarter total to 1.6 million square feet. 5.4 million square feet remains under construction, with 2.3 million square feet scheduled for delivery in 2016.
Transactions in every market contributed to downtown’s positive performance during the Q3. As tenants relocate to new developments in the south and west downtown areas, the financial district is left with gaps in its AAA towers, such as Oxford Properties’ TD Canada Trust Tower, which hasn’t faced great vacancy since its construction in the 1990s.
Big-block vacancies in midtown were leased. A few noteworthy deals include the reported Teleperformance Canada deal at 75 Eglinton Avenue. Meanwhile MasterCard will move its head Canadian office from 2 Bloor Street West to 121 Bloor Street East, formally the Ontario College of Teachers space. And Oxford Properties took over leasing of Canada Square, with the aim to redevelop the complex. Midtown vacancy slipped to 6.6 per cent. Availability increased to 8.2 per cent because of space returning to the market in St. Clair and Bloor Class B product and Class A sublet space in Eglinton.
On the suburban end, the market shifts from positive to negative growth each quarter because tenants are moving between nodes and buildings. Still, banks continue to crave large block of suburban space, while high-end renewals highlighted the Q3, like SNC-Lavalin’s extension at 2251 and 2285 Speakman Drive.
