term deal in the Airport Corporate Centre (ACC), nearly 120,000 sf ... Crossroads Corporate Centre in Meadowvale will gr
1 ST QUARTER 2014
Toronto West Office Market Report Partnership. Performance.
Market Overview In line with more modest leasing activity levels across Canada, uneven demand for office space in the Toronto West market led to a 70-basispoint (bps) spike in the overall availability rate as the first quarter of 2014 came to a close. After 135,000 square feet (sf) was trimmed from the sublet market in the fourth quarter of 2013 with Bayer’s longterm deal in the Airport Corporate Centre (ACC), nearly 120,000 sf was returned to the sublet market to kick-start 2014 - inflating sublet availability in the West market to 3.1%. With nearly 1.5 million square feet (msf) of product in the development pipeline, completions of nine speculative and pre-leased projects (representing 38% of the pipeline) will feed into the decelerating leasing environment over the next year. In the first quarter, the Toronto West market regained almost all the available sublet space that was leased last quarter at 2920 Matheson Blvd. E. The expansion of the market’s sublet availability to over 3% was substantially impacted by Loblaw’s decision to return the full building at 320 Matheson Blvd. W. to the sublet market. At nearly 91,000 sf of rentable area, this large-block void pushed up Heartland’s sublease availability by 250 bps to 7.4%. For perspective, sublet available space across the Toronto West market has climbed by more than 308,000 sf over the past year to 1.3 msf, currently. This equates to 20% of the total available space in Toronto West.
2,500
18.0%
14.0% 1,500 12.0% 1,000
10.0% 8.0%
500
6.0% 0 4.0% -500
2.0%
-1,000
0.0% '01
'02
New Supply
'03
'04
'05
'06
'07
'08
Change in Occupied Area
'09
'10
'11
Vacancy
'12
'13
Q1'14
Availability
Although future product completions will inevitably impact the Toronto West market, the remaining 47% of the development pipeline includes a healthy percentage of speculative development (24%), while the remaining developments have achieved an average pre-leasing commitment of 59%. Crossroads Corporate Centre in Meadowvale will grow by 66,000 sf in the third quarter of 2014 with the anticipated completion of 7025 Langer Dr., currently 50% pre-leased. The complex is already home to corporate users including Hoffman-La Roche, E.I. du Pont Canada, and Shaw. With tenants in pursuit of higher-quality product in the West market, average asking rates continue to be supported by strength in the class A and B markets, at $16.72 per square foot (psf) and $13.00 psf, respectively. The increased supply of new options in the marketplace this year is expected to slightly soften asking rental rates in select nodes, including the ACC and Meadowvale.
TORONTO WEST MARKET SUMMARY
Total Availability/Vacancy Rate (%)
16.0%
2,000
Square Feet (000's)
In spite of leasing velocity slowing to a low ebb to start the year, nearly 53% of the current development pipeline is comprised of build-tosuit projects, demonstrating that the West market remains a prestige destination for large national and multinational users. Slated for completion at the tail end of 2014, Orlando Corporation is bringing to market the first of two towers at 60 Standish Court, totaling nearly 180,000 sf; this project is being developed as the national head office for TJX Canada (Winners, HomeSense and Marshalls). In the adjacent node, Dixie and Eglinton, Metrus Properties is overseeing the development of a 202,000-sf project at 4980 Tahoe Blvd., secured by Sobey’s as its new regional headquarters.
Toronto West Historical Office Market Trends - All Classes
Asking Net Rent (Avg. $psf)
‐ Occupancy Classes rp. Ctr. st rth est ington
linton North South
orridor ale Ctr.
C O M PA R I S O N O F L E A S I N G O P T I O N S F O R T E N A N T S - T O R O N T O W E S T Additional Costs (Avg. $psf)
$15.18
$12.97
$12.28
$11.81
$11.94
$12.62
$8.80
$10.78
$16.90
$19.27
$15.21
$12.31
$15.60
$10.37
$12.39
$11.24
$11.50
$9.27
$11.96
$14.69
$14.88
$15.43
$14.00
$11.86
$14.50
$16.82
$15.95
$11.89
$16.58
$15.52
$17.92
$11.38
$10.70
$11.27
$14.88
$12.61
Toronto West - Occupancy Costs - All Classes $40.00 $35.00
$ p.s.f.
$30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00
Asking Net Rent (Avg. $psf)
Additional Costs (Avg. $psf)
TORONTO WEST SIGNIFICANT TRANSACTIONS
For more information on this report, please contact Avison Young:
Bill Argeropoulos
416.673.4029
Michael Ho
905.283.2396
Vice President & Director of Research, Canada
avisonyoung.com © 2014 Avison Young Commercial Real Estate (Ontario) Inc., Brokerage E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young. Acknowledgement: Data for graphs, charts and tables used in this report are sourced from Avison Young and Altus InSite. Some of the data in this report has been gathered from third party sources and has not been independently verified by Avison Young. Avison Young makes no warranties or representations as to the completeness or accuracy thereof.
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