Location, location, location. Companies are continuing to pay a premium for the most expensive spaces and Toronto, Calgary and Vancouver are the Canadian cities with the highest office asking rents.
According to Jones Lang LaSalle’s (JLL) Most Expensive Streets for Office Space report, competition is mounting on these streets, located in prestigious financial, government and retail hubs.
Brett Miller, president of JLL Canada, says the most significant trend across major markets is the surge in new developments.
“Although we have only seen minor changes to the top market rents thus far in 2014, we anticipate that as the new inventory comes to market, overall rents will decrease in the older class “A” stock,” he says, “whilst headline rents in new developments may raise the top line rents.”
Here are the top expensive streets (by average asking rents) in the surveyed cities:
1. Bay Street, Toronto, Ont., $68.52 per square foot (psf)
Bay Street features the headquarters of major Canadian banks and is also home to many investment, accounting and law firms. Brookfield Place, at 161 Bay St., continues to command the highest office rents of any building in Canada.
2. 8th Avenue SW, Calgary, Alta., $59.06 psf
Large vacancies and availabilities along this corridor typically experience significant activity and command market leading rates. Large oil and gas companies have historically clustered around the central business district in this area.
3. Burrard Street, Vancouver, B.C., $58.87 psf
Approximately 18.3 per cent of downtown Class A office supply is located on Burrard Street between West Georgia Street and Canada Place. Vacancy in these six notable buildings currently sits at 1.6 per cent, which, according to JLL, justifies why this prominent location commands some of the highest rental rates in the city.
4. Albert Street, Ottawa, Ont., $52.10 psf
Albert Street is mainly home to government related office towers, including numerous foreign embassies, and a few of the largest Canadian business law firms.
5. 101st Street NW, Edmonton, Alta., $46.71 psf
Edmonton’s average asking rent dropped from $48.19 psf. in 2013 to $46.71 psf. this year. Despite a decline in the average price from last year, 101st Street NW is expected to remain the most expensive street in Edmonton with the intention to build Arena district, a large-scale mixed-use project incorporating the city’s new NHL arena
6. René-Lévesque W, Montreal, Que., $44.28 psf
The average gross rent on the street has not changed significantly year-over-year, but the total value of tenant inducement packages nearly doubled. The most expensive building on the street (1250 René-Lévesque W) has seen some downward pressure on its net rent (between $2 and $4 psf) due to 170,000 square feet of vacant space left behind by Heenan Blaikie.
7. Upper Water Street, Halifax, N.S., $36.42 psf
Upper Water Street continues to command the highest rents in Halifax, however new construction is expected to put downward pressure on rents in existing office buildings.
8. Portage Avenue, Winnipeg, Man., $35.67 psf
With Portage Avenue’s average rent increasing $0.50 over last year, the Class A market remains tight and is expected to remain so through 2015.
9. Laurier Boulevard, Québec City, Que., $27.50 psf
There has been no notable increase in the average gross rent. Vacancy on this street remains low (5.2 per cent) in relation to the rest of the market (7.8 per cent).