Don’t Worry About Toronto’s Office Market
Sure, the 5.8M SF of office space going up downtown between now and 2017 might seem like a lot of inventory. But CBRE EVP John O’Toole isn’t fretting. “We don’t anticipate having a surplus of space,” he tells Bisnow, noting the steady demand from tenants downtown, where 58% of new projects (such as RBC WaterPark Place III, seen below) are pre-leased. And vacated buildings are being backfilled with tenants in search of spaces 100k SF and under. “We were worried at the start of 2014 that we were going to have too much space,” John says. “But we’ve had a strong year in terms of absorption.”
What becomes of older buildings left behind in the flight to quality? John stresses that these are still “some of the best office buildings in Canada”; they’re just in need of upgrades. He’s seeing landlords become more aggressive in seeking to pre-lease or re-lease these older spaces before undertaking renovations, offering tenants favourable deal structures, such as contributing toward the construction costs. “Landlords are being competitive,” John says. “They’re going after tenants to ensure that if they have an opportunity to lease the space, they will.”
