Approximately 9.4 million square feet of new office projects are currently under construction in the Greater Toronto Area, a pace of development largely impelled by outsized market demand for the asset class, according to Colliers International (Toronto) senior managing director Daniel Holmes.
The additional supply would be especially crucial, considering that at present, Toronto’s office vacancy is around 1%.
“If you look at Manhattan, Chicago, Washington, San Francisco, Boston, Pittsburgh, Atlanta, Miami [and] Phoenix as all major central business districts within North America, Toronto has the lowest vacancy rate of all of them,” Holmes told Postmedia.
A significant portion of the new space is slated for completion either by next year or by 2021, Colliers (Toronto) analyst Michael Rowe noted.
“We’re now looking at 10 to 15 developments [overall],” Rowe added. “That’s not including the ones that will potentially kick off as well.”
Earlier this year, a market analysis by Avison Young indicated that the tech industry (especially e-commerce) represented an overwhelmingly large component of commercial asset demand in Toronto.
In fact, the office segment was the only commercial sub-sector in the GTA to post quarter-over-quarter growth during the beginning of the year.
Office sales volume amounted to a total of $767 million during Q1 2019. This was roughly 8% higher than the levels seen during Q4 2018, and around 28% of the regional commercial market’s total for the first quarter.