Sustained Demand for Space Downtown; Development Set to Resume
TORONTO, December 1st, 2011 – In its Real Estate Market Study published today, Newmark Knight Frank Devencore reported that through the first three quarters of 2011, the corporate real estate market in the Greater Toronto Area continued to be one of the most active in the country. Office space continues to be absorbed at a healthy pace and combined vacancy rates in the Downtown District are in the 5.3% range. Vacancy rates in the corporate corridors outside of Toronto’s Downtown District have been higher than those downtown over the past few years, but space absorption is accelerating in some of these areas as well.

“Over 3 million square feet of the state-of the-art Class “A” space was delivered to the market over the past few years, and virtually all of it has been leased,” said Allan Schaffer, President/Broker of Record of Devencore Realties Corporation Canada Limited, Brokerage. “Despite an uncertain economy, the continuing demand for premiere space has generated plans for further developments. Additionally, an emerging trend that we highlighted in our market study a year ago—specifically, the way in which urban condo development is reenergizing the downtown Toronto office market—has taken firmer root. As more young professionals move downtown, corporations who wish to attract and retain this skilled workforce are recognizing the competitive advantage they might gain by locating or consolidating their organizations downtown as well. This trend is helping to sustain the demand for space in the downtown office market."

While major new developments projects are taking shape, it will still be at least three years before they are completed so the market will remain tight. “Tenants who wish to expand and who currently reside in buildings with little vacant space may find they will have to pay considerably more for the expansion space, and leasing negotiations may be more challenging over the short term,” Schaffer said. “However, there is ample available space in some of the Class “A” buildings whose tenants moved into the new towers.”

Across the rest of Canada, corporate real estate markets have remained relatively healthy in 2011. The overall vacancy rate in Class “A” and Class “B” office buildings in Canada's major cities dropped from 6.8% to 5.4% over the first half of the year, and total vacant space fell from 14 million square feet to just over 11 million square feet.

About Newmark Knight Frank Devencore

Devencore is the Canadian partner of Newmark Knight Frank, one of the largest real estate service firms in the world. Newmark Knight Frank Devencore is Canada's largest corporate real estate advisor and brokerage exclusively representing corporate, industrial and retail...