Commercial rents are set to rise sharply due to rising demand, an influx of highly-skilled workers and a shortage of new buildings. Toronto will lead the surge for commercial real estate but Vancouver, Montreal and Calgary are also expected to feel the heat.
The forecast from JLL Canada covers the next three to five years and expects Toronto in particular to catch up with rental growth in major US cities.
"I predict that rental rates of offices in the major markets will grow significantly over the next 3 years and anticipate that rents will increase as much as 50% in the most desirable well located trophy office buildings" says Brett Miller, Chief Executive Officer of JLL Canada. "In Toronto, valuations for trophy office product were on par with those seen in New York, Paris, London and Shanghai."
The vacancy rate is Toronto is the lowest of major North American cities and there is no significant new supply expected for three years once the EY Tower is completed.
"With US technology firms looking to further expand their presence in the country, Canada will see a flux of highly-skilled immigrants enter the workforce, creating more demand for office space," added Miller.
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While rising home prices are a concern for many in Toronto, there’s another real estate boom on the horizon.