With Toronto's office vacancy rate at about one per cent, developers have about 9.4 million square feet of new office projects under way.
When compared to their North American office market peers such as San Francisco, Boston, Miami and Washington D.C., developers in Toronto are building far more office space these days, but they’re also facing incredibly high demand for that space.
“We’re still playing catch up,” said Daniel Holmes, a senior managing director with Colliers International in Toronto.
“If you look at Manhattan, Chicago, Washington, San Francisco, Boston, Pittsburgh, Atlanta, Miami (and) Phoenix as all major central business districts within North America, Toronto has the lowest vacancy rate of all of them,” he told Postmedia.
Toronto’s office vacancy is about 1 per cent.
San Francisco — with its overall office inventory of about 93.5 million square feet — has roughly the same inventory as Toronto (at 91.3 million square feet), but the Northern California centre is facing an overall office vacancy of about 5 per cent, according to Colliers.
Toronto office inventory set to expand by about 10 per cent
In an attempt to make up ground on the critically-low vacancy rate, developers in the GTA have about 9.4 million square feet of new office projects under way, Holmes said.
The majority of that new office product will complete next year or the year after, said Michael Rowe, an analyst also with Colliers in Toronto.
Toronto’s recent notable waves of office construction were 2013-2014 and 2016-17, he said. Both cycles included a “handful” of new office buildings. This wave is dramatically different, he said.
“We’re now looking at 10 to 15 developments (overall),” Rowe said. “That’s not including the ones that will potentially kick off as well.”
Below are the five largest office projects that are either under construction or recently completed, according to data provided by Colliers International. (And here is a list of Canada’s 5 largest (non-Toronto) office projects under construction.)
• CIBC Square I. The first of two towers in the heart of downtown Toronto across the street from Union Station. Located at 81 Bay Street, the first tower will rise 49 storeys and will include 1.5 million square feet of office. Already 100 per cent pre-leased, developers Hines and Ivanhoe Cambridge expect to deliver the tower at the end of 2020.
• 160 Front Street West. This 46-storey tower is taking shape in Toronto’s Financial Core at its namesake address. Also fully pre-leased, the tower is being developed by Cadillac Fairview and built by PCL. The building includes 1.2-million-square-feet of office space and is expected to complete at the end of 2022.
• The Well. At 410-460 Front Street West, Allied Properties and RioCan real estate investment trusts are erecting the 38-storey building as part of a mixed-use complex. The project includes more than one million square feet of office space, of which 80 per cent is already pre-leased. The office component is expected to complete in late 2021.
• Sun Life Financial Tower. Officially opened in 2017, Sun Life is a 35-storey building that includes about 800,000 square feet of office space. Located at One York Street, the building accommodates, among others, more than 2,000 Sun Life workers on 17 of the building’s floors.
• The EY Tower. Also now complete and operating, the 40-storey tower owned by Oxford Properties at 100 Adelaide Street West added about 900,000 square feet of office space to the market when it opened in 2017.