While Toronto’s residential real estate market continues to be shaky, its commercial real estate market is thriving. Even as supply dwindles, demand remains high. The low supply and high demand have pressured prices upward, great news for commercial real estate investors.
A recent report by Morguard found that Toronto’s stable economy is a bonus for businesses looking to invest in the city. Unlike other Canadian cities, Toronto has a diverse economy. Keith Reading, Morguard’s director of research said, “If you look at Toronto, it’s the biggest economic centre in Canada and also the most stable. Over time, values will only increase in the commercial sector. You can’t just create another Toronto. It’s a 24-hour, world-class city, so your investment is pretty safe in Toronto. It’s a large, diverse economy and it has a lot of things going for it. If you’re looking for safety in your investment, Toronto is the first place to go in Canada.”
Companies are already struggling to find adequate office space in the city. Toronto has over 87.2 million square feet of office space downtown, but only a 2.4% vacancy rate. Currently, there are 6 millions square feet of additional office space being built in the city, but that won’t even begin to cover demand. Most of these new developments also won’t be completed for another three years at least.
Experts are saying that Toronto may reach 0% vacancy rate in the next 12 months. It’s not just stand-alone office spaces that are in hot demand either. Co-working spaces are opening up across the city, with many at full capacity already.
Vancouver is also experiencing a thriving commercial real estate market, even as residential home sales fall. Vancouver currently has 23.9 million square feet of downtown offices and a vacancy rate of 4.4%. That puts them only second to Toronto. Of the new office spaces being built in the city, 61% of the space has already been pre-leased.
Overall, Toronto’s commercial real estate remains a solid investment. While vacancy continues to go down, businesses remain highly interested in the city.