GTA Office Market Report Toronto Q4 2020

Greater
Toronto Area
Office
Market Report
Q4 2020
Net Absorption
This Quarter
12-Month Absorption
-1.4M SF -3.7M SF
5-Year Quarterly Average
Vacancy
40k SF
This Quarter
Year-over-Year
6.2 % 220 bps
Asking Net Rent
This Quarter*
Year-over-Year
$
21.95 PSF 10 %
*weighted average
Development/Sales
Under Construction
Sale Price (avg.)
9.0M SF
$
533 PSF
New Supply
177k SF
MARKET OUTLOOK
Negative absorption in Q4 2020 lowered to
-1.4M SF, bringing the 12-month absorption
for the GTA to a total of -3.7M SF. The GTA
vacancy rate increased to 6.2%, a total of
220 bps higher since the beginning of the
year. In the downtown market, vacancy
reached 4.3%, an increase of 320 bps since
Q1 2020. There was a total of 177K SF of
new supply introduced this quarter,
including 99 Atlantic Avenue and 1908
Ironoak Way.
Downward pressure on rental rates
continued in Q4 with lower averages
recorded across the GTA’s major
submarkets. Since Q3, the average
Downtown rental rate decreased 4% to
$36.44 PSF while the average Midtown rate
decreased 3% to $27.08 PSF. Across the
Suburban market, rental rates remained
relatively stable, decreasing by only 1% to
$16.80 PSF. Despite this decline in rents on
a submarket level, the continued large influx
this quarter of Downtown Class AAA, A and
B available space is skewing the proportional
weighting of higher quality space with higher
rents in the make up of overall GTA average
rent. Therefore, despite the respective
submarkets seeing falling rents, there was
an increase to the average GTA asking rental
rate of 2% to $21.95 PSF since Q3.
The proportion of sublease availability
compared to total availability across the GTA
continued to climb this quarter, resting at
22.7% as of Q4 2020. This was an increase
of 18 bps from the previous quarter and
nearly 100 bps since Q4 2019. Noticeably
across the major submarkets, the proportion
of sublease availability skyrocketed to 38.1%
in the Downtown market– nearly doubling
the amount of sublease space available the
same period last year.
Looking back on 2020, landlords were intent
on preserving face rates and preferred to
offer incentives and flexible terms to
tenants. Moving forward in 2021, an
adjustment in price expectations between
landlords and tenants will be imperative in
order to increase transaction activity. Until
middle ground is reached between the two
parties and more certainty returns to the
market, more instances of short-term deals
are likely expected as companies continue to
hold off making major business decisions.
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Market Metro
Overview
01
Rental Rates by Building Class
02
Weighted Average Asking Net Rates ($PSF)
Rental Rate Growth*
By Market | Q4 2019 – Q4 2020
$50
$40
$30
$20
$10
$0
AAA
AAA
A
B
A
C
B C
A
A
A
B
B C
B
C
C
Downtown Midtown GTA N/E GTA W GTA Total
Downtown -6%
Midtown
7%
GTA N/E
3%
GTA W
2%
GTA Total
9%
*Weighted Average Asking Net Rent
03
Leasing Activity by Industry
By Square Feet Leased
FIRE and TAMI
represents 44%
of all leases in
Q4
FIRE | Financial Services,
Insurance and Real Estate
TAMI | Technology, Advertising,
Media and Information
HEG | Healthcare, Education and
Government
ACE | Accountants, Consultants,
Engineers
Legal
Other
04
320 bps
Downtown
1.1% Q4’19
GTA W
8.0% Q4’19
Vacancy Rate by Market
Q4 2019 – Q4 2020
170 bps 190 bps
Midtown
1.6% Q4’19
160 bps 220 bps
GTA Total
4.0% Q4’19
GTA N/E
4.9% Q4’19
Net Absorption / New Supply (SF)
05
1,500,000
1,000,000
500,000
0
-500,000
-1,000,000
Historical Overview
Vacancy vs. Net Absorption and New Supply
Vacancy Rate Net Absorption New Supply
6.2%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
Vacancy
-1,500,000
Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
-8.0%
Colliers Canada | GTA Office Market Report | Q4 2020
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Greater Toronto Area
Market Statistics
Market
Class
# of Buildings
Total Inventory
(SF)
Vacancy Rate
Availability Rate
Prop. of
Sublease Avail.
Net Absorption
(SF)
Weighted Avg.
Asking Net
Rents ($PSF)
Weighted Avg.
Asking Gross
Rent ($PSF)
New Supply
(SF)
Under
Construction
(SF)
Financial Core All 104 37,503,429 3.8% 6.9% 24.1% -318,051 $38.53 $68.11 0 3,581,717
Downtown East All 69 6,534,496 3.6% 4.7% 42.6% -63,630 $28.38 $50.39 0 2,413,186
Downtown North All 135 21,901,749 1.8% 2.4% 45.4% -49,359 $31.48 $53.10 0 250,995
Downtown South All 23 7,997,369 9.7% 5.3% 50.8% -19,637 $42.29 $69.34 0 0
Downtown West All 152 18,260,513 6.1% 8.3% 55.0% 3,908 $32.73 $51.37 130,000 1,949,005
Downtown All 483 92,197,556 4.3% 5.8% 38.1% -446,769 $36.44 $62.52 130,000 8,194,903
Yonge - Bloor All 74 10,868,092 2.5% 6.3% 19.4% -76,698 $30.51 $53.61 0 0
Yonge - St. Clair All 30 3,299,852 2.7% 6.2% 50.1% -61,265 $27.02 $50.36 0 0
Yonge - Eglinton All 69 6,871,539 3.9% 5.9% 36.5% -75,574 $19.77 $39.33 0 0
Toronto West All 49 2,841,089 5.6% 5.1% 14.2% -20,233 $27.04 $40.34 0 63,000
Midtown All 222 23,880,572 3.3% 6.0% 28.1% -233,770 $27.08 $48.15 0 63,000
Don Mills - Eglinton All 67 6,363,915 4.5% 7.2% 33.6% 694 $13.00 $29.61 0 0
Duncan Mill All 43 2,929,028 9.8% 9.8% 22.7% -28,926 $15.31 $31.42 0 0
Consumers Road All 47 6,063,203 8.2% 8.6% 3.7% -75,245 $14.38 $31.65 0 0
Woodbine/Steeles All 70 6,692,553 8.1% 8.8% 11.3% -20,454 $15.41 $30.12 0 0
Toronto East All 22 1,641,465 3.8% 4.0% 2.2% 0 $30.50 $40.78 0 0
Central East All 249 23,690,164 7.1% 8.1% 15.9% -123,931 $15.22 $31.10 0 0
Yorkdale All 30 2,694,369 3.6% 3.0% 23.4% 4,968 $13.30 $32.61 0 0
Dufferin - Finch All 33 2,492,048 7.0% 5.9% 17.5% -1,243 $16.62 $31.85 0 0
North Yonge Corridor All 58 10,303,603 7.0% 9.6% 7.6% -144,334 $22.45 $43.35 0 115,357
Central North All 121 15,490,020 6.4% 7.9% 9.9% -140,609 $21.29 $41.48 0 115,357
Vaughan All 82 5,245,746 7.1% 7.0% 16.2% 8,065 $19.18 $30.24 0 0
Richmond Hill All 12 844,067 2.2% 2.2% 6.5% -8,406 $16.26 $29.79 0 0
Hwy 404 - Hwy 407 All 134 11,175,815 4.9% 6.1% 16.3% -88,972 $16.31 $30.32 0 0
Markham Town Centre All 38 3,257,837 16.2% 15.6% 45.7% -181,136 $15.65 $30.10 0 0
GTA North All 266 20,523,465 7.1% 7.7% 25.6% -270,449 $16.91 $30.24 0 0
Scarborough Town Centre All 84 8,261,398 8.3% 9.1% 33.8% 6,476 $13.18 $29.61 0 0
Pickering - Oshawa All 61 190,612 3.2% 3.4% 5.6% 9,500 $13.89 $25.61 0 0
GTA East All 145 14,161,828 6.2% 6.7% 28.0% 15,976 $13.37 $28.52 0 0
Featured Transactions | Q2 2019
GTA North / East All 781 73,865,477 6.8% 7.7% 19.3% -519,013 $16.84 $32.99 0 115,357
Airport Corporate Centre All 79 6,441,210 10.2% 15.2% 22.6% 6,631 $17.09 $32.41 0 245,040
Airport East All 70 4,983,832 19.8% 21.0% 8.9% -59,061 $14.09 $30.31 0 0
Airport West All 64 5,497,042 4.3% 4.5% 11.7% -32,452 $15.86 $30.10 0 0
Brampton All 57 4,311,487 2.5% 3.3% 6.1% -17,332 $17.05 $31.08 0 0
Burlington All 79 5,135,511 8.1% 13.1% 4.9% -9,258 $16.63 $29.07 0 131,204
Cooksville All 33 1,880,213 10.4% 10.2% 3.2% -4,237 $14.12 $28.45 0 0
Hwy 401 - Hurontario All 62 5,339,515 9.9% 8.7% 12.9% -51,276 $15.47 $29.27 0 0
Hwy 427 - Bloor - Islington All 65 5,139,630 10.6% 12.4% 14.6% -23,102 $17.35 $32.78 0 33,170
Meadowvale All 88 7,596,389 9.9% 10.3% 3.8% -19,617 $18.30 $32.72 0 0
Mississauga City Centre All 33 4,361,826 9.3% 12.0% 15.6% -14,811 $18.16 $36.40 0 0
Oakville All 78 4,588,718 8.8% 9.5% 19.4% 64,700 $18.78 $30.76 47,000 232,641
Sheridan - Winston All 57 3,866,639 12.2% 11.8% 9.1% -32,591 $18.72 $31.97 0 19,892
GTA West All 765 59,142,012 9.6% 11.1% 11.9% -192,406 $16.77 $31.48 47,000 661,947
GTA Total All 2,251 249,085,617 6.2% 7.7% 22.7% -1,391,958 $21.95 $40.12 177,000 9,035,207
Colliers Canada | GTA Office Market Report | Q4 2020
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Transaction
Highlights
Notable Transactions
Landlord Address Area Market Lease Type
Turner Construction Co. 48 Yonge St 109,402 SF Central Downtown - Financial Core Renewal
Belairdirect Insurance Company 700 University Ave 55,061 SF Central Downtown - Downtown North Headlease
Stoopid Buddy Stoodios 20 Leslie St 27,000 SF Central East - Toronto East Headlease
City of Toronto 1920 Yonge St 25,687 SF Central Midtown - Yonge-Eglinton Extension
Benevity 171 East Liberty Street 12,500 SF Central Downtown - Downtown West Headlease
Her Majesty the Queen in Right
of Canada
135 Queens Plate Drive 10,626 SF Suburban West - Airport East Renewal
Notable Developments
Address – Building Name Class Area Est. Comp. Owner/Developer Building Status
CIBC Square - Tower 1 A 1,484,019 SF Q1 2021 Hines, Ivanhoe Cambridge Under Construction
The Well A 1,000,000 SF Q4 2021 Allied Properties REIT, RioCan REIT Under Construction
T3 Bayside A 524,000 SF Q2 2023 Hines Under Construction
The Shift A 460,000 SF Q4 2021 First Gulf Real Estate Corporation Under Construction
The Permanent A 304,043 SF Q1 2021 Menkes Developments Under Renovation
Waterfront Innovation Centre A 283,000 SF Q4 2021 Menkes Developments Under Construction
360 Oakville Place Dr A 139,000 SF Q1 2021 Creekbank Developments Limited Under Construction
99 Atlantic Avenue A 130,000 SF Q4 2020 Kevric Real Estate Corporation Net New Supply
Notable Investment Transactions
Address Area Purchase Price Purchaser Purchaser Profile
Concorde Corporate Centre 567,619 SF $114,000,000 Fengate Properties Private Investor
2300 Meadowvale Boulevard 242,000 SF $75,700,000 BMO Life Assurance Company Institution
8925 Torbram Road 202,000 SF $48,000,000 QuadReal Property Group Institution
53 Yonge Street 11,557 SF $11,500,000 H&R REIT Public Investor
7330 Goreway Drive 21,667 SF $9,300,000 7330 Goreway Dr Holding Inc. Private Investor
2580 Matheson Boulevard East 22,087 SF $8,225,000 The Christian and Missionary Alliance in Canada User
2902 & 2904 South Sheridan Way 20,800 SF $5,800,000 POSO Investments Corporation Private Investor
4190 - 4120 South Service Road,
4196 & 4208 Morris Drive
34,918 SF $5,175,000 Burlington Commerce Centre Inc. Private Investor
Colliers Canada | GTA Office Market Report | Q4 2020
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Colliers Research
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For more information on the GTA
Office Market, please contact:
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Managing Director,
Office Practice Group
+1 416 710 6759
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Managing Director, Brokerage
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Senior Director, National
Research & Analytics | Canada
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Director, National
Research Operations | Canada
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Senior Research Analyst
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