A few years ago, I read that Toronto’s office space market was in a stable, tenant-favouring situation (according to one office realtor’s GTA office-space report). They claimed that the average vacancy rate had continued to hover at approximately 6.5 per cent while average asking net rent was declining. They even went on to say that the Toronto office space market absorbs the new supply of office towers, and with no major new supply anticipated in the near future, the company forecasted a reverse trend towards a landlords’ market by 2011 or 2012.
It was interesting that they did not mention anything about office business centres in Toronto; they only talked about office space for lease in Toronto. With the last downturn in the economy, it seems that smaller businesses were starting up and growing faster than bigger businesses. Many smaller businesses that are looking at Toronto office space are beginning to shy away from traditional office space and instead are looking at renting serviced office space at office business centres that take the risk out of leasing office space.
Then I read an article today that says Toronto’s downtown office space market appears poised to explode again with construction, as the commercial office space real estate industry is waiting for that one spark to kick-start the office leasing sector.
This recent article puts its credibility behind rumours of continued speculation that a major office space developer will begin a new round of aggressive building in the country’s largest office-for-rent market. The speculation was that that it will go ahead with the second tower for another project that provided much of the stimulation for a round of construction when its first tower was announced back in the mid-2000’s. Another development in the downtown core may not attract the higher-end tenants who are looking at lower-priced space outside the core.
It is not surprising, with office rents in the core of the Toronto financial district remaining high, that many office space for lease seekers are now looking outside the core for a better deal in a newer office building development – or in a lower-priced office space that already exists downtown.