Greater Toronto Area – Market Report
The first half of 2016 may have ended, but the office leasing market of the Greater Toronto Area has remained busy. A large number of transactions were conducted and the second half of the year may expect to get the same deal rate. The overall results of the GTA leasing market have been mostly positive, but there are still opportunities in some buildings and markets that provide tenants with practical options at rents favourable to them.
This is actually the 5th successive positive absorption of the Greater Toronto Area. The strong performance in Midtown and Downtime has greatly improved this positive absorption. Although it may not be as strong as in the first quarter, the level of occupancy has still increased by 277,000 sq ft this quarter. All three classes also experienced growth. Class A buildings were outperformed by Class C and Class B buildings.
Demand for condo apartment rentals is also extremely strong in the area. Strong competition between renters contributed to growth in average rents, especially for 1- and 2-bedroom apartments. In the 1st quarter, the rent for a one-bedroom apartment was $1,662, which is higher than last year. Those who are looking for new rooms in popular neighbourhoods usually turn to investor-held condo apartments. This is also the reason why average rents have increased over the past year.
Even with the steady demand, the number of vacancy and availability is fluctuating due to active development. Overall availability reached 30 basis points, closing the 2nd quarter at 11.4%. This is quite lower than a year ago. Overall vacancy, on the other hand, increased 20 basis points to 10%. This is higher compared to last year’s 9.9%.
The suburbs have new supply deliveries, having 4 buildings and approximately 941,000 sq ft. 51% of which is leased. This means that the area has 6 buildings in total and more than 2 million sq ft of transactions. Another 4.6 million sq ft is being built.
Overall, leasing activity in the Greater Toronto Area is healthy. Almost 3 million sq ft of transactions were completed. The public and financial sectors were mostly responsible for this development.