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Toronto office space getting scarce, study concludes

 

"Garry Marr, Financial Post

Published: Wednesday, December 05, 2007

 

There is just not enough office space to go around in downtown Toronto, according to a new report from Cushman and Wakefield LePage.

 

The real estate company said Wednesday morning that vacancies in Toronto's central office market will reach a "tight" 3.8% in late 2008. That's way down from the 6.2% vacancy rate at the end of 2006.

 

"We are now at the point where demand will have to slow in the central market, simply due to the lack of available space," said Paul Morse, Cushman & Wakefield LePage's senior managing director of office leasing. "Those expanding or entering the market are now considering space in mid-town or further into the 905 regions to meet their space needs."

 

The Toronto office space crunch is clearly influencing the national vacancy rate which is expected to drop to 5.6% in urban centres in the fourth quarter of 2008, down from the current 6.2%. Toronto is home to 40% of all of the country's office space.

 

Cushman & Wakefield surveyed five cities across the country and found vacancy rates dropping in every city but Calgary. However, the oilpatch continues to be a relatively tight market to rent in with the downtown vacancy rate projected to rise to 3.6% by the end of next year. Suburban vacancies in Calgary are forecast to rise to 6.3%. Part of the reason for the increase in vacancies is a jump in supply that will see almost four millions square feet of new office space completed next year.

 

"Calgary has had a wild ride over the past few years," said Mr. Morse. "We've seen space incredibly tight - down to 0.4% vacancy in the core - and now we're seeing a healthy rebound to more manageable levels."

 

Vancouver is now home to the lowest vacancy rate in the country with a forecast of a 2.1% for the end of 2008. Much of the tightening is due to no new supply coming on line. Only 80,000 square feet of new construction is expected to be finished next year.

 

The real estate company predicts tenants are going to be forced to consider alternative options for space next year, including moving into less desirable Class B and Class C buildings.

 

Even the moribund Montreal office market is showing some signs of recovery. Cushman & Wakefield LePage said Montreal is forecast to have vacancy levels not seen since 1989-1990. After years of being stuck in double digits, Montreal's overall vacancy rate will hit 8.9% next year and the downtown core will see a vacancy rate of 7.6%.

 

"There is a great deal of optimism in Montreal with rental rates increasing, vacancy dropping and absorption levels remaining positive," said Mr. Morse.

 

© Financial Post 2007"

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I just spoke to a friend of mine who works at Oxford(owners of 1250 R-L and the 1100 R-L...and a few other buildings downtown) and he tells me that the occupancy rate of all thier portfolio is at 98%.

 

This more good news. Sooner or later we will see some cranes downtown!

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Don't they loose buisness at those rates? Because they have to refuse new tenants?

 

 

Technically they can't do as much business, but the god thing is that they don'T have to! They only have small pockets of space available. Whan a company has an occupancy rate of 98% across the Board, it is a very good thing.

 

If someone were to ask them for a large space, they might consider building something new...

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I just spoke to a friend of mine who works at Oxford(owners of 1250 R-L and the 1100 R-L...and a few other buildings downtown) and he tells me that the occupancy rate of all thier portfolio is at 98%.

 

This more good news. Sooner or later we will see some cranes downtown!

 

Habsfan, if you had to speculate...how of the proposed towers would you see going up first?

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