Could Toronto’s commercial real estate sector be in danger from over-supply? Figures suggest that by 2017 the vacancy rate for offices in the city could be at levels not seen since 2003 with more than 10 per cent of units vacant.
Avison Young Canada says that doesn’t include a large amount of new construction which is due to be completed in 2017. Experts say that those who are financing many of the new projects and also those who own older buildings are likely to suffer the most if vacancy rates continue on the current trend.
As supply outstrips demand, commercial rents are also set to slide adding more pressure on landlords.
Vacancies in downtown Toronto now average at six per cent, with that number set to rise to 10.5 per cent in 2017.
The new supply hitting the market - scheduled to open by 2017 - comprises 5.1 million square feet of space with about 55 per cent of that stock already leases, according to Cushman & Wakefield Inc. The high-profile tenants include Apple Inc. and Sun Life Financial Inc. Interestingly, a majority of the buildings that are under construction or planned are outside of the city’s financial core.
City officials also recently approved rezoning applications for three office buildings, including a 54-story, 126,570 square meters.
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