Downtown Toronto office vacancy rate tightened, dropping to a new record low of 2.6 per cent in the first quarter, according to a newly released report by CBRE.
The Q1 2019 Quarterly Statistics report also finds that Toronto’s industrial market, which has had 16 consecutive quarters of positive net absorption, saw its availability rate hit an all-time low of 1.5 per cent in Q1, with 2.2 million square feet (sq. ft.) of positive net absorption.
CBRE Canada vice-chairman Paul Morassutti said, “Canadian office markets continue to gather momentum, in large part as a result of rapidly growing tech and co-working sectors. The remarkable office market momentum continues to build, but tenants have fewer and fewer options if they don’t plan ahead.”
Overall, the national office property vacancy rate decreased by 40 basis points (bps) quarter-over-quarter to 11.5 per cent in Q1 2019, the lowest level since Q2 2015. The amount of office product under construction nationwide in the first quarter reached 16.0 million sq. ft. for the first time since Q4 2015. The national industrial availability rate dropped to a new record low of 3.0 per cent.
The press release said the rise of online retail sales and the associated warehouse space needed to keep up with consumer demand has pushed the Canadian industrial market into overdrive.
Some market highlights include:
Vancouver saw an additional 1.4 million sq. ft. of new office development break ground this quarter.
Montreal’s downtown office vacancy now sits at 8.6 per cent, the lowest it has been since Q4 2013.
Calgary experienced 289,515 sq. ft. of positive net absorption of downtown office space in Q1 2019, the largest quarter of positive absorption since the oil downturn in 2014. Much of the activity came from tenants taking back space previously listed for sublease, spaces being converted to co-working uses, and landlords turning unoccupied supply into amenity space.
The Halifax industrial market had 50,465 sq. ft. of positive net absorption in Q1, the ninth straight quarter of positive net absorption for that city.