Avison Young's report reveals differing vacancy trends across Toronto's office market
According to a new report by Avison Young, Toronto’s office market saw a rise in vacancy rates in the second quarter, though certain areas experienced a decline, reports BNN Bloomberg.
Released on Monday, the report revealed that the overall availability rate in Toronto’s office market increased by 70 basis points to 20.2 percent during the quarter, and by 140 basis points annually.
The office vacancy rate rose by 30 basis points compared to the previous quarter, reaching 14 percent, and saw an annual increase of 130 basis points.
“Although overall vacancy across the GTA increased during the second quarter, the trend was not evenly distributed across all markets. In fact, vacancy ticked down slightly in the Midtown (-70 bps), Toronto East (-20 bps) and Toronto North (-40 bps) markets, while it rose in Downtown (+70 bps) and Toronto West (+20 bps),” stated the report.
Market gains for class A and trophy buildings nearly offset losses in class B and C buildings during the quarter. The average asking net rental rates for office space increased to $27.3 per square foot across all available spaces.
However, the change in rates varied by geography and building class. Downtown and Midtown markets saw rising rates, Toronto West remained steady, and Toronto North and East experienced slight decreases.
The report also noted potential impacts from upcoming changes to Toronto’s office space regulations.
On July 11, the City of Toronto’s Planning and Housing Committee presented new policies for replacing office space. The city will now engage stakeholders to create new recommendations or amendments to existing regulations.
“If the city relaxes its existing policy requiring the replacement of office space as part of redevelopment projects in certain areas, the result could be a reduction in the market’s overall office inventory as some buildings could become candidates for demolition, and redevelopments would not necessarily include the same amount of office space,” the report explained.
