sign in sign up
<<
Home , Greater Toronto Area

MARKETBEAT GREATER AREA Office Q4 2020

YoY 12-Mo. Chg Forecast ECONOMY: Brighter Days Expected Driven primarily by strong manufacturing and construction activity, the Greater Toronto Area (GTA) posted job gains for five 8.8% consecutive months leading up to November 2020, at which point growth was flat and then fell in December by -1.5% as new Availability Rate lockdowns were imposed. Job growth is expected to expand to other sectors in 2021 as the immunization programs are rolled out and restrictions ease. Following a -5.6% contraction in 2020, GDP growth in was projected to reach 5.5% in 2021, powered by -5.8M rejuvenated consumer spending and government stimulus programs. (Source: Statistics and RBC Economics) Net Absorption EOY, SF SUPPLY/DEMAND: Sublets Drive Availability to New Highs 2020 has been a year like none other for GTA’s office market. All indicators – availability, sublets, leasing activity and absorption bore $48.08 the scars of the sustained pandemic. With many occupiers still holding back on real estate decisions or subleasing space to reduce Asking Gross Rent, PSF costs, leasing activity across GTA’s office market plunged to 773,000 square feet (sf), far below the pre-pandemic three-year average of 2.3 million square feet (msf)/qtr. Meanwhile, sublet availability surged to 4.6 msf, surpassing the peak of the dotcom meltdown. (Overall, All PropertyClasses) Against such headwinds, the downtown availability rate reached 5.9% in the fourth quarter of 2020 – a 4.0% increase over the year and the highest year-over-year increase in twenty-eight years. Since the beginning of the pandemic sublet availability has climbed to a ECONOMIC INDICATORS record-high, with the main upward thrust caused by the shedding of space in fringe markets surrounding the core. In the fourth quarter, Q4 2020 the tide turned and over 50% of the sublets were located in the financial core, driving this submarket’s availability up to 5.4%. Despite YoY 12-Mo. current dynamics, Toronto’s downtown market still has the lowest availability rate among all comparable markets in , Chg Forecast which bodes well for eventual recovery. 3.5M Although the GTA’s suburban markets have also been hit hard by the pandemic, the impact has been less dramatic. Overall availability GTA Employment increased to 11.7% in the fourth quarter - a 230 basis point increase over the year. Leasing activity remained at a virtual standstill, falling to a record-low of 292,000 sf. Meanwhile, an uptick in sublets during the quarter pushed availability to its current 17-year high.

10.7% PRICING: Rents Under Pressure GTA With sublets accounting for close to sixty percent of new availability downtown, landlords are offering additional concessions at this Unemployment Rate stage to secure transactions. Generally, average asking rents held steady in downtown and suburban markets through 2020. However, displaced space left behind by tenants relocating into 3.8 msf of new inventory coming to the downtown market in the first half of 2021 8.6% will change dynamics and undoubtedly exert downward pressure on rates later in the year. Canada SPACE DEMAND / DELIVERIES OVERALL AVAILABILITY & NET ASKING RENT Unemployment Rate $30 10% 4,000 Source: $27 8% 2,000

0 $24 6%

-2,000 $21 4% Thousands

-4,000 $18 2% -6,000 2016 2017 2018 2019 2020 $15 0% 2016 2017 2018 2019 2020 Net Absorption, SF Construction Completions, SF Asking Net Rent, $ PSF Availability Rate MARKETBEAT GREATER TORONTO AREA Office Q4 2020

MARKET STATISTICS

INVENTORY SUBLET DIRECT OVERALL CURRENT QTR YTD OVERALL YTDLEASING UNDER OVERALL AVG OVERALL AVG SUBMARKET (SF) VACANT VACANT VACANCY OVERALL NET NETABSORPTION ACTIVITY CNSTR ASKING RENT ASKING RENT (SF) (SF) RATE ABSORPTION (SF) (SF) (SF)** (SF) (ALL CLASSES)* (CLASS A)* Financial Core 35,042,846 762,697 1,145,861 5.4% -648,520 -1,013,461 985,418 2,063,000 $70.90 $73.08 Downtown Fringe 39,874,854 1,364,683 1,157,967 6.3% -482,638 -1,787,671 1,155,459 5,660,527 $55.14 $59.80 DOWNTOWN TOTALS 74,917,700 2,127,380 2,303,828 5.9% -1,131,158 -2,801,132 2,140,877 7,723,527 $65.13 $69.51 Midtown 16,072,664 303,676 612,155 5.7% -229,904 -581,927 322,525 0 $47.89 $50.79 CBD TOTALS 90,990,364 2,431,056 2,915,983 5.9% -1,361,062 -3,383,059 2,463,402 7,723,527 $62.08 $67.06 GTA East 32,106,110 1,109,172 2,599,686 11.6% -447,860 -964,833 640,764 0 $31.44 $34.05 GTA North 15,578,290 162,316 1,317,751 9.5% -160,316 -335,976 386,759 0 $40.96 $41.45 GTA West 42,830,713 933,324 4,428,598 12.5% -620,609 -1,124,657 1,890,812 211,509 $32.69 $34.53 SUBURBAN AREA TOTALS 90,515,113 2,204,812 8,346,035 11.7% -1,228,785 -2,425,466 2,918,335 211,509 $33.67 $35.86 GTA TOTALS 181,505,477 4,635,868 11,262,018 8.8% -2,589,847 -5,808,525 5,381,737 7,935,036 $48.08 $52.87 *Rental rates reflect gross asking $psf/year ** Leasing activity excludes renewals

KEY LEASE TRANSACTIONS Q4 2020 JUANA ROSS PROPERTY SUBMARKET TENANT SF TYPE Research Director 100 Queens Quay East Downtown South Richardson Wealth 85,000 Headlease +1 416 359 2621 /[email protected] 18 York Street Downtown South Major E-Commerce company 79,000 Headlease 120 Bremner Boulevard Downtown South Major E-Commerce company 49,000 Headlease cushmanwakefield.com 7777 Weston Road Golf Town 35,000 Sublease

80-82 Spadina Avenue Downtown West WealthSimple 35,000 Headlease 78 Mowat Avenue King West Tik Tok 26,000 Sublease 407 Shore Road Oakville Infinity Cares Homes Inc. 26,000 Headlease A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION Cushman & Wakefield (NYSE: CWK) is a leading global real KEY SALES TRANSACTIONS Q4 2020 estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among PROPERTY SUBMARKET SELLER / BUYER SF PRICE / $ PSF the largest real estate services firms with approximately Artis REIT / 53,000 employees in 400 offices and 60 countries. In 2019, Concorde Corporate Centre Don Mills & Eglinton 568,619 $114 M / $201 Fengate Asset Management the firm had revenue of $8.8 billion across core services of property, facilities and project management, leasing, capital Sun Life Assurance Company / 2465 Argentia Road Meadowvale 249,345 $72.2 M / $290 markets, valuation and other services. To learn more, visit Groupe Mach www.cushmanwakefield.com or follow @CushWake on 2300 Meadowvale Boulevard Meadowvale Crown Realty Partners / BMO Life Assurance 242,000 $75.7 M / $313 Twitter. Hudson's Bay Company / 8925 Torbram Road 202,000 $48.0 M / $238 QuadReal Property Group ©2021 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed Dorsay Development Corporation / Carttera 2455 Meadowpine Boulevard Meadowvale 115,015 $24.0 M / $209 to be reliable. The information may contain errors or omissions and is Private Equities Inc. presented without any warranty or representations as to its accuracy.. 53 Financial Core 53 Yonge St. Inc. / H&R Reit 11,557 $11.5 M / $995