The knowledge economy – especially in the form of tech and co-working companies – is stimulating long-term demand for office space in Canada’s downtown markets.
In its Mid-Year 2019 Global Office Market Report, Avison Young stated that ever-advancing and ever-accessible communications technology has impelled a significant shift towards expansive office plans in cities around the world.
“Against a global backdrop of diminishing business confidence and a weaker outlook for economic growth, a robust labour market in the world’s largest economies continues to underpin demand for office space with high employment levels prevalent across a number of major markets,” according to the report.
Across Canada, the office market has seen the positive absorption of 9 million square feet (msf) in the year ending June 30, 2019. This has massively outstripped the nearly 6 msf absorption during the immediately preceding 12-month period.
The inflamed demand is driving a feverish pace of construction. As of mid-year 2019, more than 21 msf of office space is under development in major Canadian cities, growing by around 40% year-over-year.
Overall office vacancy stood at 10.3%. The heavyweights were Toronto, Montreal, and Vancouver, all of which have magnetized large high-technology firms over the past few years.
“The labour market remains the major catalyst for Canada’s economic expansion and thriving commercial real estate sector,” Avison Young principal and president (Canada) Mark Fieder said.
“Urban intensification boosted by immigration, a growing knowledge-based economy and the rising co-working industry have powered Canada’s office market. A global phenomenon, co-working is taking Canada by storm and prompting landlords and tenants to adapt. Meanwhile, the growing technology sector is taking a bigger slice of the leasing pie – especially in Vancouver, Toronto, Montreal and Ottawa – and, in many cases, driving innovation within traditional businesses.”