Up until the first quarter of this year, the commercial market in Canada looked up in the largest cities including Toronto.
Office Market Reports:
Even with the tepid job growth, the Canadian office market is in the midst of new development cycle as 14.1 Million sq. ft. of new office space is under construction in downtown markets.
The Chairman of one of the large national brokers states, “The Canadian economy may not be firing on all cylinders, but the Toronto and Calgary office markets turned out quite a performance last quarter.”
There has been a healthy demand for the most rentable office space in more than a decade among real estate investment trusts. Toronto is likely to sustain the uptick in downtown office demands. The suburban office markets faced significant office leasing activity from coast to coast. As compared to the downtown office markets, the suburban sectors had been tenanted by large portion of American companies – this bodes well for the economy in the future.
These are the outlooks taken from the third quarter statistical summary of 2014. Some predict that the exuberant developments in the Toronto office segments will not go so smoothly.
Industrial Market Reports:
In the Canadian Industrial market, the demand for more space outweighs the supply as the tenants go hungry for more space.
The pendulum is turning and today, the demand for the industrial space in the market led to the commencement of 19.9 Million sq. ft. of industrial construction activity nationally. This height of construction in the industrial commercial sector is the highest on record.
“We have never seen this much industrial space under construction in Canada”, said the director of Research for CBRE Limited.
Every Canadian financial institution is looking for space and new additional projects are being planned for the years to come. Therefore, the projection for 2015 Commercial Real Estate trend is that the market will be tenant favorable in the near future with the recent construction boom in office, and particularly, in the Canadian industrial sector.
In addition to the tremendous developments in the industrial markets, leasing of suburban office markets from different subset of businesses will encourage economic growth. It can be assumed that the strong office leasing activity in the core commercial markets may translate into a widespread office demand in 2015.
Toronto and Vancouver are both expected to face neutral market conditions especially in the downtown market by next year. The market trends also suggest that 5.4 million square feet of new AAA office space will be ready for occupancy in downtown Toronto between 2014 – 2017.
“The new towers will fill up as the expanding economy creates more jobs, boosting demand for updated offices”. – reports the senior managing director of office leasing for Cushman & Wakefield in Toronto.
The data compiled by brokers indicate that by next three years, the rents are projected to slide in the downtown office space. The predicted losers will be the older properties landlords, who stand to lose the tenants, facing lower returns.