Why Owners Of Aging Office Buildings Should Beware
Despite a deluge of new downtown office supply, demand is keeping pace, CBRE's Canada research chief, Raymond Wong, tells us. While 1M SF was completed downtown in Q1 (half the national total), a strong economy helped Toronto absorb 834k SF. Noteworthy deals in Q1 included Aviva taking 47,500 SF at 100 King St W and Touchstone Institute leasing 41,500 SF at 145 Wellington St W. The downtown office vacancy rate was 5.3% in Q1, down from 5.7% a year ago. But expect that to change with the next flood of downtown office between now and 2019, says Ray. “We anticipate that will push the vacancy rate up.”
It'll be a slight uptick, says Ray, but that's good news for tenants, who face limited options downtown for newer space 20k SF-plus. And it means landlords of aging buildings need to up their game to retain occupants amid a flight to quality with updated amenities and services. High-profile projects—like First Gulf’s Globe and Mail Centre, Concert Properties’ 20 Wellington, Oxford’s EY Tower, Daniels’ 130 Queens Quay E (above) and Allied/RioCan’s King-Portland Centre—aren’t facing challenges, with 75% of the 2.8M SF of new supply pre-leased, Ray notes. “It’s all the older spaces being left behind that we’ll be watching.”
