The increasing demand for office space in downtown cores is set to put further pressure on already tight rental markets for residential properties in key urban centres.
Many companies that migrated to the suburbs to avail of less expensive rental rates in recent years are now returning to the downtown areas, according to Matt Elkind from the Condo Store Realty in Toronto.
“Companies found that what they were saving on rent, they were losing in higher costs on employee retention,” says Elkind. “This is a huge concern and big cost for employers so it is more feasible, for many reasons, for them to return to the downtown area.”
This, he tells CREW, will create a greater demand for housing in the downtown core. "People will naturally follow the jobs, and we are anticipating a lot of demand for condo units from young professionals with respect to this.”
According to Collier’s International GTA report, the average vacancy rate across the GTA dropped by two basis points to 5.8 per cent for the first quarter of 2014, compared to the same period in 2013.
“The migration of suburbs and uptown tenants south along public transportation lines, coupled with demand for smaller parcels of office space in premium locations, are likely to push vacancy rates in other sub-markets upwards,” says John Arnoldi, executive managing director, Toronto Region with Colliers International.
Over 5.4 million square feet of office space is currently under construction in the GTA alone.
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The return of corporate businesses to downtown areas is expected to boost a demand for condo units.