After a poor start to 2014, more people are leasing offices in Toronto, finds Avison Young’s Q2 2014 GTA Office Market Report.
Throughout the second quarter, says the report, more offices became occupied in downtown, midtown and West Toronto. However, the East and North areas of the city remain underused.
That’s why the city’s overall vacancy rate across 1,408 office buildings remained at 9.4% in Q2, says Avison Young, while the overall availability rate increased by 10 basis points over Q1 2014.
Still, “the uptick in leasing activity is a welcomed respite, especially in downtown Toronto, as the market prepares for the first wave of new development,” says Bill Argeropoulos, vice president and director of Research for Avison Young.
More space will be available this Fall, and development will continue through to 2017.
Argeropoulos notes most renters are currently seeking 12- to 18-month leases even though many options are available. “As these spaces fill up,” he adds, it will be interesting to see how prices are affected across the office market.
Further, he notes “the banks have been particularly busy on the transaction front, leasing upwards of 300,000 square feet of both direct and sublet space downtown, for various lease terms.
“TD Bank is reportedly out with a big requirement, [but] others that haven’t been as active on the big-deal front are positioning themselves to follow suit. I wouldn’t be surprised if one of [the other] banks kicks off the next major tower downtown.”
Over the summer, leasing volume tends to fall, so Avison Young is looking forward to post-summer data.