Intensified demand brought about by an influx of tech companies has pushed Toronto’s office market towards becoming one of Canada’s premier investment destinations, according to a CBRE Group report.
The vacancy rate of the office sector fell to 2.7% during the fourth quarter of 2018, leading to commercial rental rates reaching an average of $35.37 per square foot.
This far outstripped Montreal’s figures, which posted a median rental rate of $22.76/sf on a 9.4% vacancy rate during the same quarter. And Vancouver, while having a higher average at $37.20/sf, did not command the level of Toronto’s demand, with a 3.8% vacancy.
Even intensified development offered only the most minimal of respites for the overheated market. As of the end of 2018, approximately 14.2 million square feet of new commercial space was under construction nationwide, with most of this situated in Toronto, Vancouver, and Montreal.
This was the strongest development activity since the first quarter of 2016, the CBRE noted.
CBRE added that despite the 7.3 million sf of space still under development in Toronto, “chronic shortage” will continue to characterize the market for the foreseeable future.
For perspective, this greatly exceeds Vancouver’s 2.86 million sf and Montreal’s 954,510 sf. This also continues the running theme of demand consistently outpacing supply nationwide, as the overall Canadian office vacancy rate fell to 11.9% in Q4 2018.