This is despite the downtown office vacancy rate reaching 12.5% in the third quarter
While overall demand among typical office tenants continues to be below historical levels across the Greater Toronto Area, educational institutions such as public and private colleges and universities have been a source of continuing demand for office space in downtown, midtown, and the suburbs, according to Avison Young.
During the third quarter, the downtown area saw its office vacancy rate reach 12.5%, up from 2.1% in Q1 2020. Available sublet space went up by 22% annually, up to 8.7 million square feet.
“Not affected by the same trends that have reduced many companies’ need for office space, educational institutions have taken advantage of the opportunity to expand their footprints in traditional office buildings,” Avison Young reported.
“Numerous transactions – both lease and sale – across the GTA have seen schools secure additional space adjacent to existing facilities as well as establishing new satellite locations.”
While hybrid work gains ground, Canada's office market is far from fading. Companies are reimagining the office's purpose - Marie-France Benoit tells @CMPmagazine tech advances had begun to transform workplace culture well before COVID-19: https://t.co/LjNXwndkND #AYdifference— Avison Young | Canada (@AY_Canada) October 18, 2023
Avison Young noted that amid these trends, newly developed buildings have the edge.
“With a wide range of available space options open to tenants in the leasing market, many are taking advantage of the opportunity to move to new and better premises when they can,” Avison Young said. “In this environment, newer buildings and those offering modern amenities have greater appeal for tenants.”
Buildings with the latest amenities, transit connections, and common-area upgrades are proving to be the most desirable.
“This situation leaves many older, less well-located, or otherwise less competitive buildings in need of significant capital investment to remain competitive – leading owners to evaluate whether the necessary investments are justified by the potential returns,” Avison Young said.