C O L L I E R S I N T E R N AT I O N A L
G TA S U B L E A S E R E P O RT O F F I C E M A R K E T U P D AT E
|
J U LY 2 0 0 9
SUBLEASES BY NUMBERS July 2009 has the potential to be the turning point for the sublet market in the # of Sublease Sublease Size Total sf of Remaining Average Availabilities* in sf - Mean Subleases Term in Asking Net Greater Toronto Area (GTA) where the steady climb in new sublet listings months - Mean Rent psf finally slowed and turned negative. Available sublet space decreased by 1.7 per $12.49 GTA 440 8,256 3,632,556 42 cent or 64,000 sq. ft. during July 2009. With this, available sublet space is now down to 3.6 million sq. ft. across all office buildings in the GTA. $13.63 Downtown 168 5,594 1,305,680 41 Comparing the region market by market, downtown continues to be the $14.32 Midtown 48 5,594 268,510 48 largest sublet market with 1.3 million sq. ft. of sublet space. While the change $12.48 34 9,473 322,094 52 in the Central markets of midtown and downtown were flat, large decreases GTA North were observed in the suburban markets with GTA West leading the charge by GTA West $13.20 114 8,750 997,465 39 dropping 65,000 sq. ft. of sublet space. $10.00 GTA East 76 9,721 738,807 41 The number of sublet listings also decreased to 440, two less than a month ago. The average size of sublet listings stayed virtually flat, decreasing by 100 sq. ft. to * Note: For this statistic the smallest available units are considered. Any contiguous & 8,256 sq. ft. as did the GTA-wide average of the remaining term which stayed at divisible units are NOT included. 42 months. All these are signs of a stabilizing office leasing market. More than half of the sublet listings don’t quote asking net rent as sub-landlords are often prohibited to post rents by their head-lease. Considering the 42 per cent of sublet listings which quote net rents, we observed almost no change (-0.12 per cent) during July 2009. The largest discounts were recorded in downtown and GTA North. At the end of July, sublet space in the GTA was discounted on average by 27 per cent compared to direct space, which is down from the 29 per cent discount offered in June 2009. t REMAINING
TERM OF SUBLEASES IN THE GTA OFFICE MARKET
AVAILABLE SUBLEASE SPACE BY BUILDING CLASS
Over half of the sublet listings have a remaining lease term of over three years. More and more companies with longer terms left on their lease agreement are putting unused space onto the market as indicated by an increasing ratio of sublets with a remaining lease term of three years and more. It currently sits at 53 per cent.
58 per cent of the sublet space is located in Class A buildings, which is higher than the Class A space inventory share of the total office inventory, currently sitting at 46 per cent. This disproportion is especially pronounced in GTA North, downtown and midtown markets.
100
90
90
86
83
80
A
B
C
2,132,187
A
76
72
# of Subleases
70 60
1,232,802
B
50 40
38
30 20
280,517
C
10 0 12 Months or less
13 to 24 Months
25 to 36 Months
37 to 48 Months
49 to 60 Months
More than 60 Months
0
SUBLEASES BY SIZE Listings with a size range between 0 and 10,000 sq. ft. remain in the majority of both the total square footage available for sublease (53 per cent) and the number of sublet listings (70 per cent). This ratio has increased slightly compared to June 2009 as fewer larger subleases have come onto the market during July 2009 compared to smaller subleases.
www.colliers.com/toronto
500000
1000000
1500000
2000000
2500000
2,500 - 4,999 sf - 109 Listings 400,503 sf 24% 5,000 - 9,999 sf - 103 Listings 718,200 sf 23%
0 - 2,499 sf - 99 Listings 162,405 sf 22%
25,000 sf or more - 13 Listings 397,710 sf 3% 20,000 sf to 24,999 sf - 30 Listings 684,535 sf 7%
15,000 sf - 19,999 sf - 38 Listings 646,530 sf 9%
10,000 - 14,999 sf - 53 Listings 635,623 sf 12%