With its Q4 stats rounding out 2014, Cushman & Wakefield reaffirmed a flourishing urbanization trend in the downtown Toronto office market.
The commercial real estate broker found a vigorous demand for downtown office space with vacancy rising to just 5.0 per cent from 4.9 per cent in the Q3, even with the addition of 1.6 million square feet of space.
Cushman & Wakefield says due to the success of new towers attracting tenants, the leasing rate peaked at 2.3 million square feet, while absorption reached a high of 683,000 square feet.
Michael Caplice, senior managing director and market leader of Cushman & Wakefield (GTA), points to millennials as the creators of new sectors, which add to the office foundation.
“The demand for downtown office space in Toronto in the last five years has been phenomenal,” he said. “Year after year, we’ve seen unprecedented office and condo development, and a steady flow of people and businesses moving into our downtown.”
In fact, since the beginning of the office development boom in 2009, about 230,000 square feet has been the quarterly average downtown absorption.
Such Q4 results sustain the belief recently highlighted in Cushman & Wakefield’s Facing the Millennial Wave report, which indicated that office locations near public transit, amenities and mixed use neighbourhoods lure the Gen Y workforce.
Last year, the PwC and the Urban Land Institute’s Emerging Trends in Real Estate 2015 report called urbanization “the new normal,” pointing to the influx of young people clustering into city cores.
Chris Potter, leader of the Canadian real estate tax practice at PwC, said the trend could be attributed to millennials “wanting to have a lifestyle that allows them to live, work and play in the same community,” without long commutes.