Newmark Knight Frank Devencore

Newmark Knight Frank Devencore

May 31, 2011 07:00 ET

Newmark Knight Frank Devencore Reports on Strong Toronto Office Market

Tenant Demand for Top-Tier Space May Lead to New Development Projects

TORONTO, ONTARIO--(Marketwire - May 31, 2011) - In its Real Estate Market Study published today, Newmark Knight Frank Devencore reported that office market in Toronto's Downtown District remained very robust through the last half of 2010 and the first quarter of 2011. Tenant interest in the new office towers that were delivered to the market over the past couple of years speaks to the pent-up demand for top-tier space. It also demonstrates the capacity of many of Toronto's major businesses to absorb premium rental rates.

"The substantial demand for the new breed of office space has led to late-stage discussions for at least three new developments," said Allan Schaffer, President/Broker of Record of Devencore Realties Corporation Canada Limited, Brokerage. "For example, Oxford is currently negotiating with a major financial tenant to launch a 700,000-900,000-square-foot building near WaterPark Place; Cadillac Fairview is marketing an 800,000-square-foot mixed-use project at 16 York Street; and in the Downtown West area Allied Canadian is actively seeking lead tenants focused on the new media industry for a proposed 240,000-square-foot tower. However, these projects are at least a couple of years from completion, so any new office inventory will be limited over the short term."

Indeed, the Market Study emphasizes that there are potentially interesting deals to be made in the older Class "A" space that is being freed up by tenants relocating to the new towers.

"At Commerce Court West for example, nearly 500,000 square feet is available," Schaffer said. "Similarly, the Royal Trust Tower at 77 King Street West has 350,000 square feet available, a 36% availability rate. It has been a long while since premiere buildings like these have had this amount of leasable space on the market."

In the business corridors outside Toronto's downtown core, vacancy rates are considerably higher, which translates into greater negotiating leverage for tenants. However, opportunities can vary significantly in the various submarkets. Therefore, tenants should work closely with their advisors to identify the most advantageous leasing options.

Across the rest of the country, vacancy rates have continued to decline as the economy has strengthened. The overall vacancy rate in Class "A" and Class "B" buildings in Canada's major cities fell from 7.1% to 6.8% over the last six months of 2010, even as the total inventory of Class "A" and Class "B" office space increased. Should the economic recovery continue on its current path, Newmark Knight Frank Devencore expects that office vacancy rates should continue to decline across most of the country in the months ahead, and rental rates in some cities will likely begin to rise.

About Newmark Knight Frank Devencore

Devencore is the Canadian partner of Newmark Knight Frank, one of the largest independent real estate service firms in the world. Newmark Knight Frank Devencore is Canada's largest corporate real estate advisor and brokerage exclusively representing corporate, industrial and retail space users. With offices across the country, Newmark Knight Frank Devencore offers its global clientele comprehensive services that are individually designed to ensure executive real estate decisions are supported by effective strategies and professional execution.

Headquartered in New York, Newmark Knight Frank and London-based partner Knight Frank operate from over 220 offices in established and emerging property markets on six continents. With a combined staff of 7,300 and revenues last year exceeding $861 million, this major force in real estate is meeting the local and global needs of owners, tenants, investors and developers worldwide.

For further information, visit www.newmarkkf.com.

A report is available at the following address: http://english.devencorenkf.com/home/media-center/press-releases.aspx?d=314

Contact Information

  • Allan Schaffer
    President / Broker of Record
    Newmark Knight Frank Devencore
    416-366-0366, ext. 231
    aschaffer@devencorenkf.com
    Devencore Realties Corporation / Canada Limited, Brokerage

    Sylvie Bachand
    Director, Marketing and Communications
    Newmark Knight Frank Devencore
    514-392-1330, ext. 225
    sbachand@devencorenkf.com
    Devencore Ltd. / Real Estate Agency