The GTA office market saw the absorption of 763,000 square feet during the first quarter of this year, with much of the activity occurring in the downtown and Toronto West areas.
This volume has pulled down availability to a decade-low of 8.6%, according to Avison Young’s First Quarter 2019 / Office Market Report: Greater Toronto Area report.
Vacancy also went down to 5.6%, with the downtown experiencing even tighter market conditions at a vacancy rate of 1.9%.
The absorption has considerably outstripped the addition of 503,000 sq. ft. of new supply. Additionally, 94% of this new volume has already been preleased.
“The Greater Toronto Area (GTA) office market recorded impressive results in 2018, fuelled by the insatiable demand for downtown office space – not only from traditional occupiers, but also a growing cohort of technology and co-sharing tenants,” the study noted.
Q1 2019 represented the continuation of these trends, characterized by declining availability, robust development activity, and “significant upward pressure on rental rates in select markets and asset classes.”
Around 11.2 million sq. ft. of office property is either confirmed or being currently built, representing 6% of the GTA’s existing office stock. However, only 1.1 million sq. ft. is scheduled for completion by the end of this year.
Most of this new space will be situated in the suburbs, Avison Young noted.
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