Canadian Office Space Market

[yyzer]

Interesting article published today in bisnow.com, talking about downtown Toronto office construction, both current and future....

here's a quote...

"Even with eight office buildings and 5M SF in the works—not to mention the six towers completed in the past five years (4.6M SF)—downtown vacancy rates will likely remain low according to a Colliers report released yesterday. "If this is the level of activity the market experiences during a 'recession' period, we should buckle up, as this will be quite the ride," Colliers EMD John Arnoldi says. Much of the space in the pipeline has been pre-leased, while 15 potential office development sites are being actively marketed. With firms such as Coca-Cola and Telus moving back to the core to take advantage of an educated, young workforce, space is absorbed as fast as it's built. About 5.1% of downtown space is vacant, the lowest since a record 4.0% in 2001.

http://www.bisnow.com/commercial-rea...ready-to-rule/

[LeftCoaster]

Originally Posted by yyzer

Interesting article published today in bisnow.com, talking about downtown Toronto office construction, both current and future....

here's a quote...

"Even with eight office buildings and 5M SF in the works—not to mention the six towers completed in the past five years (4.6M SF)—downtown vacancy rates will likely remain low according to a Colliers report released yesterday. "If this is the level of activity the market experiences during a 'recession' period, we should buckle up, as this will be quite the ride," Colliers EMD John Arnoldi says. Much of the space in the pipeline has been pre-leased, while 15 potential office development sites are being actively marketed. With firms such as Coca-Cola and Telus moving back to the core to take advantage of an educated, young workforce, space is absorbed as fast as it's built. About 5.1% of downtown space is vacant, the lowest since a record 4.0% in 2001.

http://www.bisnow.com/commercial-rea...ready-to-rule/

These two pieces are misleading, and well the second is downright wrong.

First off of course vacancy is not rising, as none of the new product has hit market yet, and none of the new tenants have vacated their own space. We'll see how things look in 2016/17, that is when we will see the vacancy hit of the current cycle.

And the second point is just false. Much of the latest announced buildings are preleased, true, but at a very low threshold, many less than 50%. There is a TON of space left to lease up in the new builds, let alone the vacancy left by moving tenants. Don't expect a major new office building to start construction for quite some time (outside of the ones we already know are launching).

[caltrane74]

What about the firms that want to move downtown? - ( Telus Example - moving to the core from the burbs)

The vacancy might well happen, or will be happening outside of the downtown core.

[LeftCoaster]

That is of course a factor, but it is generally overblown in terms of its effect on absorption and too much suburban vacancy does effect downtown. If more firms vacate the burbs then suburban vacancy rises and rates drop. As that happens a firm is more likely to stay in the burbs as the cost benefit ratio just isnt the same.

For example a firm may want to relocate downtown, and would have if rates were closer between the two, but since vacancy is so low in the burbs the rates are significantly lower than the core, causing the advantages of being central to not trump the added cost.

[caltrane74]

Record Year for Toronto Office Property Deals - Total of 13 Billion

Real estate firms chased commercial properties in the Greater Toronto Area like never before in 2012, setting a record for both the number of deals done and the value of those deals.

Research firm RealNet Canada Inc. has crunched the numbers and found 1,984 asset sales of more than $1-million last year, for properties such as office buildings, industrial complexes, retail space, hotels and apartments. About $13-billion worth of deals were done in total – more than double the level of 2009, when the market bottomed out in the wake of the financial crisis.


Globe and Mail

[caltrane74]

http://www.cbre.ca/AssetLibrary/Toro...nt_Sep2013.pdf

Apple is moving there Markham Office to Downtown Toronto..(Bremner Tower)

Bremner Tower still under construction - Short Stubby Tower on the right. Taller Tower is Southcore Delta


my photo

[SignalHillHiker]

Gaahhh... I wish my employer would combine its Markham and Mississauga offices in favour of one downtown. It'd make my trips to TO much more exciting.

[WhipperSnapper]

Most suburban companies will say in the burbs but, it's reaching a point where they will lose out greatly if they don't open or expand a satelite office downtown

[north 42]

There have been many suburban companies that have moved their offices out of the suburbs into downtown Detroit recently, and it's really noticeable now at street level, much more foot traffic and retail. Even if many are staying put in their suburban office parks, they are opening up DT Detroit satellite offices to be a part of the exciting buzz that hasn't been seen in decades. The future of Detroit's core is looking very bright, especially with the new light rail plan for Woodward.
I know this thread is Canadian, but since Windsor and Detroit are one urban region, I figure it's ok to post this here.

[Mikemike]

Edmonton look to be getting 3 new office towers. One 500,000 sf tower is under construction, the other two are even bigger expected to be announced within the next month or so, and there's another RFP that may result in a fourth. If they all go ahead it would be a 15% increase in downtown office space under construction at once. That's enough so we will have a spike in vacancy. But here too, momentum is shifting to downtown.

[north 42]

Originally Posted by Mikemike

Edmonton look to be getting 3 new office towers. One 500,000 sf tower is under construction, the other two are even bigger expected to be announced within the next month or so, and there's another RFP that may result in a fourth. If they all go ahead it would be a 15% increase in downtown office space under construction at once. That's enough so we will have a spike in vacancy. But here too, momentum is shifting to downtown.

Hopefully you guys can give Calgary a run for their money when it comes to CBD office towers! You already are when it comes to population!

[Coldrsx]

^won't happen, but it will be respectable for any sized city of a million 2.

[Chadillaccc]

Edmonton is doing great regardless. Should be at par with Ottawa by the end of this boom, if Manulife II and a couple others go through.


According to the Q3 Colliers report, Calgary has had a seriously negative office-space absorption rate this year. Our suburban office absorption YTD (all inventory) is respectable at nearly 110 000 sq. ft. However, our downtown office absorption rate (all inventory) is -782 000 sq. ft. A lot of that is due to companies moving office space from lower class office space to class A space though.

http://www.colliers.com/-/media/file...13q3_final.pdf

Amazing that Calgary has a total of 64 984 677 sq. ft. with another 6 476 962 UC currently! Downtown alone is just a bit under 40 000 000 sq. ft. Not bad for a city our size.


Sorry if this info has been posted before.

[Coldrsx]

Q4 2013 skyline review

http://www.collierscanada.com/en/Offices/edmonton

Click here:

[caltrane74]

Shrinking workplaces but more shopping spaces coming in 2014

Toronto leading the way for rest of Canada with office boom and retail explosion, new report says

Two major trends will define Toronto’s commercial real estate market in 2014 — a decline in the amount of space per office worker and an explosion in retail therapy destinations, says a new report from commercial brokerage CBRE.

“The old expression used to be that retail follows rooftops,” as new shopping centres opened in the wake of new suburban subdivisions, says Ross Moore, CBRE’s director of research for Canada. “Now retail is following elevators, given all the condo construction going on.”

It’s a trend being seen right across the country, with Toronto leading the way — now accounting for more than 50 per cent of all retail space under construction in Canada, says CBRE’s Canadian Market Outlook 2014 report , released Monday.

Even sprawling giants like Home Depot and Walmart are looking to build up, rather than just out, and are looking for opportunities to create tighter, two-storey urban stores within easy reach of all those condo dwellers, Ross says.

And more European-style mixed-used office and condo developments, with blocks of stores and restaurants at the base — much like that proposed last week by partners Diamond Corp., RioCan REIT and Allied Properties REIT for the corner of Front and Spadina — will become the modern shopping malls for downtown dwellers.

Even decades-old shopping centres on the periphery of the downtown core are undergoing facelifts and expansions that will continue beyond 2014, as the country undergoes the biggest retail explosion in history, says CBRE.

Toronto is at the forefront as high-end retailers such as Nordstrom and Saks Fifth Avenue prepare to throw open their doors here, the report notes.

“Never before in Canadian retail history has the department store segment been the subject of so much focus or been so heavily contested,” says Tom Balkos, a Canadian director of CBRE’s retail services group.

[SignalHillHiker]

I love this trend of relocating downtown for young professionals. I hope that becomes the norm, across the country, and even more pronounced than it is today. A renaissance for the cores. It'd be the kind of world I want to live in.

[Surrealplaces]

Lots of stuff coming down the pipe in E-town.

Originally Posted by Coldrsx

Q4 2013 skyline review

http://www.collierscanada.com/en/Offices/edmonton

Click here:

[Denscity]

FYI Vancouver has 7 office towers under construction and are adding around 2.2 million square feet of office space.

[caltrane74]

Top 30 Global Cities for Commercial Real Estate Investment

Toronto makes the cut



Read Article Here

[LeftCoaster]

Digging this thread up from the dead... and renaming it! Thought this would be a good place to discuss office trends in Canada, since that is a pretty important driving factor in the development of some of the better looking towers our cities get, office towers.

That said im going to start this off on a bad note. Q1 2014 numbers are out for Canadian cities and they are not pretty. Every single major market except Ottawa recorded negative absorption, with the country as a whole recording negative absorption of -1.5 million sq ft.

Going West to East:

Vancouver:

• 9.4% Vacancy
• -165,000 sq ft absorption
• $23 net rent

Calgary:

• 10.9% Vacancy
• -175,000 sq ft absorption
• $30 net rent

Edmonton:

• 10.5% Vacancy
• -10,000 sq ft absorption
• $24 net rent

Toronto:

• 9.6% Vacancy
• -300,000 sq ft absorption
• $21 net rent

Ottawa:

• 8.9% Vacancy
• 71,000 sq ft absorption
• $19 net rent

Montreal:

• 11.7% Vacancy
• -785,000 sq ft absorption
• $18 net rent

Some additional notes:

- Absorption for downtown markets was more favorable, with Calgary and Vancouver staying essentially flat. Toronto saw the biggest hit to downtown absorption as 285,000 of the 300,000 sq ft of lost space was downtown.

- Some submarkets remain strong, with downtown vacancy rates in Vancouver and Toronto hovering around 6.2 and 6.5% respectively.

- Sublet markets remain large and influential, representing more than 40% of vacant space in Calgary and more than 20% in Toronto.