Toronto West Q2 2019 Office Insight
Suburban West experienced strong leasing activity in the second quarter • Total vacancy in Suburban West edged up 30 basis points from the previous quarter but remained on it’s downward trend, down 240 basis points since this time in 2018. • Two large blocks were vacated and 304 The East Mall was removed from the inventory as it will be redeveloped to high rise residential. • Rental growth continues with gross rents up 2.6 percent year-over-year. The Suburban West office market experienced an increase of leasing activity in the second quarter with 550,000 square feet of office space leased. The majority being either new or expansions in the submarkets. As a result, the direct availability rate fell 120 basis points to 12.1 percent quarter-overquarter. The quality and readiness of available spaces are among the key drivers attracting tenants like Prodigy Games, which consolidated and leased 95,000 square feet (s.f.) at 226 Wyecroft Road. Other notable transactions included BDO which leased 65,000 s.f. at 360 Oakville Place, Deloitte leased 47,000 s.f. at 5500 North Service Rd. while Aramark and Industrial Alliance leased 45,000 s.f. each at 5150 Spectrum Way and 1415 Joshua Creek, respectively. Suburban tenants are increasingly looking to upgrade into more efficient real estate and shed underutilized space: TD Bank vacated 1875 Buckhorn Gate and consolidated into their existing facilities in the area while GE and Loyalty One both downsized, returning 175,000 s.f. and 50,000 s.f. to the leasing market. As a result, Suburban West recorded 229,672 square feet of negative net absorption in Q2. An outlier this quarter was the Ontario Clean Water Authority which will be leaving downtown Toronto for Suburban West, leasing 30,000 s.f. at 2085 Hurontario Street. With downtown availability near historic lows and rental rates soaring, we expect more examples of this reverse migration. On the development side, Carttera broke ground at 1900 Iron Oak Way (55,000 s.f.) this quarter, the property is fully leased to Samuel, Son & Co. The largest investment transaction this quarter was Fiera Capital’s acquisition of the sixbuilding Aero Centre office park in ACC for $164.3 million from HOOPP. Outlook Office vacancy in the Toronto West currently stands at 13.7 percent and is expected to remain on it’s downward trajectory as tenant move-ins intensify over the next quarters. For more information, contact: Shivani Garg | Shivani.garg@am.jll.com
Fundamentals Forecast YTD net absorption 164,688 s.f. ▲ Under construction 526,470 s.f. ▶ Total vacancy 13.7% ▼ Average asking rent (gross) $30.85 p.s.f. ▲ Concessions Stable ▶ Supply and demand (s.f.)
Net absorption Deliveries
3,000,000 2,000,000 1,000,000 0 2016
2017
2018
YTD 2019
Total vacancy 15.7%
15.6% 14.2%
2016
2017
2018
Average asking net rents ($/s.f.)
13.7%
Q2 2019
Class A Class B
$20.00
$15.00
$10.00 2016
2017
2018
Q2 2019
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