Toronto West - Avison Young
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First Quarter 2018 / Office Market Report
Toronto West
Market Facts Market Overview
926,500 sf Building on the success of the fourth
quarter and 2017 overall, Toronto West,
is an ongoing trend that has continued
since the second quarter of 2016.
New office space completed in the Greater Toronto Area’s (GTA) largest
Oakville during the last five years
suburban office market, produced As a result of tenants’ continued interest
another quarter of positive results. In in the Toronto West office market, the
all, Toronto West registered net positive overall availability rate decreased 30
44 absorption of close to 92,000 square basis points (bps) from year-end 2017
and 30 bps year-over-year to finish the
feet (sf ) in the opening quarter of 2018.
Buildings with more than 50,000 sf of first quarter at 16.8% – the lowest level
Class A buildings garnered the majority
available space in Toronto West
of the growth during the quarter, in almost three years. Overall vacancy
largely at the expense of class C sits at 12.9%, down 100 bps year-over-
buildings. The Burlington and Oakville year. The Airport East node experienced
16.8% nodes contributed to the market’s the biggest quarter-over-quarter
overall first quarter performance, while improvement, with availability dropping
Toronto West availability rate
the Airport-area nodes (Airport East, 210 bps to finish the quarter at 15.9%.
North, West and Corporate Centre Burlington and Meadowvale, two of the
(ACC)) collectively showed relative more prominent office nodes in Toronto
strength, with first-quarter gains in ACC West, saw availability rates fall 110 bps
$16.73 psf and Airport East more than offsetting and 70 bps, to end the quarter at 13.7%
Average direct net asking rental rate losses, largely in Airport North. Positive and 18.7%, respectively. Dixie & Eglinton
for Airport Corporate Centre (class A) absorption in the Toronto West market and Brampton office nodes continue
Partnership. Performance. avisonyoung.com
Toronto West First Quarter 2018 / Office Market Report
13.7% 15 $15.63
Overall availability rate in Class A buildings in Average asking net rent psf
Burlington Toronto West with largest in Toronto West
contiguous available area
greater than 50,000 sf
Toronto West Occupancy Costs - All Classes
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0
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Net Asking Rent (Avg. $psf) Additional Costs (Avg. $psf)
Partnership. Performance. avisonyoung.comToronto West First Quarter 2018 / Office Market Report
to boast the lowest availability Dundas-Kipling Centre in Etobicoke
rates, coming in at 4.5% and 5.2%, South, benefit from being Toronto
respectively. West’s only office complexes with
Positive absorption in immediate subway access. Transit
With so many options on the market, accessibility for workers will also
the Toronto West market landlords are competing fiercely to be enhanced by Metrolinx’s Kipling
attract and retain tenants – the latter Mobility Hub – now underway –
has continued since the was prominent as three of the first which has the potential to increase
second quarter of 2016. quarter’s significant transactions the appeal of office product in
were renewals, including Edward adjacent nodes (including Bloor
Jones for 78,400 sf at Dream Office & Islington, Etobicoke South,
REIT’s Sussex Centre in Mississauga Highway 427 Corridor and even the
and Becton Dickinson at GWL ACC). This is also close to the new
Realty Advisors' (GWL) 2100 Derry Etobicoke Civic Centre site (former
Toronto West Rd. W. in Meadowvale for 73,000 sf. Westwood Theatre lands) and the
Overall Availability & Vacancy Trends Others took advantage of sublease reconstruction of the Six Points
20% opportunities, notably Scotiabank for Interchange.
18% 68,000 sf (former Mondelez space)
16%
14% at Polaris Realty’s 2660 Matheson Only one building was completed
12% Blvd. E. in the ACC, and Cognizant in the first quarter of 2018: 2
10%
8%
Technology Solutions taking 58,700 International Blvd. in the Airport
6% sf (former WorleyParsons space) at East node came online, replacing an
4% Manulife’s 7100 West Credit Ave. in older building on the site and adding
2%
0%
Meadowvale. The healthy appetite close to 75,000 sf of new class A
2014 2015 2016 2017 Q1'18 for Toronto West office space inventory (currently 100% available
Vacancy Rate Availability Rate continues as a number of large for lease). The development pipeline
tenants are rumoured to be in the for office product now totals close
market. to 745,000 sf of class A inventory
Toronto West underway across seven buildings,
The strong market activity continues the bulk of which will be completed
Overall Absorption Trends
to push occupancy costs upwards, later in 2018. This represents more
1,400
1,200
albeit slowly, with average asking net than 50% of the total office space
1,000 rental rates increasing to $15.63 per currently under development in the
800 square foot (psf ) from $15.55 psf three GTA suburban office market (Toronto
sf (thousands)
600
months earlier, and up from $15.06 East, North, and West). Potential
400
200
psf year-over-year. With an abundance future tenants looking for class A
0 of new supply introduced recently in space in Heartland and Oakville may
-200 the Oakville office market (926,500 sf soon have additional options, as the
-400
in the past five years), it is no surprise majority of space under construction
-600
2014 2015 2016 2017 Q1'18 that Halton Region’s most populous in Toronto West is located in these
municipality currently commands the submarkets.
highest average asking net rental rate
in the west end at $18.41 psf. Investors remain bullish on Toronto
Toronto West West office product, looking to
Overall New Supply Trends The next most costly node is Bloor capitalize on the market’s improving
2,500 & Islington – a smaller office node fundamentals. Noteworthy
with direct subway access within transactions included Morguard’s
2,000
core buildings – with an average acquisition of 5985 Explorer Dr. in
asking net rental rate of $17.63
sf (thousands)
1,500 the ACC from GWL for $50.6 million,
psf. This node also continues to as well as Slate Asset Management’s
1,000
be the most expensive submarket purchase of 5500 North Service Rd.
500 on a gross basis (net rental plus in Burlington from Cominar REIT for
0
additional costs), approaching $40 $43.1 million, part of a $348-million
2014 2015 2016 2017 Q1'18 psf. Starlight Investments’ Bloor GTA-wide office portfolio sale.
Completions Under Construction Islington Place, along with Manulife’s
Partnership. Performance. avisonyoung.comToronto West First Quarter 2018 / Office Market Report
Toronto West Market Summary
Change in
New Supply
Availability Trend Vacancy Trend Occupied Area
(000's of sf)
(000's of sf)
12 Months 3 Months Current 12 Months 3 Months Current Current YTD Under
YTD Preleased
Ago Ago Quarter Ago Ago Quarter Quarter Completions Construction
17.1% 17.1% 16.8% 13.9% 12.8% 12.9% 92 92 75 745 43%
Comparison of Leasing Options for Tenants
Available Space Availability Rate
Bldgs with largest
Number of spaces
Bldgs with more contiguous available
Office Space in Select Nodes No. of Bldgs between 4k and Direct % Sublet % Total %
than 50k sf area greater than
8k sf
50k sf
Airport Corp Ctr Class A 37 8 3 15 14.7 1.9 16.6
Airport Corp Ctr All Classes 51 10 4 21 15.9 2.3 18.2
Burlington Class A 24 1 0 11 14.6 0.8 15.4
Burlington All Classes 59 1 0 24 13.0 0.7 13.7
Heartland Class A 27 4 0 13 7.3 4.4 11.7
Heartland All Classes 46 5 1 26 12.3 3.4 15.7
Meadowvale Class A 35 5 4 4 14.0 4.0 18.0
Meadowvale All Classes 61 7 5 12 15.8 2.9 18.7
Mississauga City Ctr Class A 14 2 0 16 12.1 1.3 13.4
Mississauga City Ctr All Classes 24 2 0 22 11.6 1.0 12.6
Oakville Class A 39 5 3 9 16.5 0.6 17.1
Oakville All Classes 62 5 3 15 18.8 0.5 19.3
Toronto West Class A 245 32 15 96 13.6 2.0 15.6
Toronto West All Classes 501 44 24 182 15.3 1.5 16.8
Toronto West Significant Transactions
Address Node Tenant Size
90 Burnhamthorpe Road West Mississauga City Centre Edward Jones 78,400 sf
2100 Derry Road West Meadowvale Becton Dickinson 73,000 sf
2660 Matheson Boulevard East Airport Corporate Centre Scotiabank 68,000 sf
7100 West Credit Avenue Meadowvale Cognizant Technology Solutions 58,700 sf
2425 Matheson Boulevard East Airport Corporate Centre Regus Business Centre 53,000 sf
For more information, please contact:
Bill Argeropoulos Warren D'Souza
Principal & Practice Leader, Research (Canada) Research Manager,
416.673.4029 Toronto Suburban Markets
avisonyoung.com bill.argeropoulos@avisonyoung.com 905.283.2331
warren.dsouza@avisonyoung.com
© 2018 Avison Young Commercial Real Estate (Ontario) Inc., Brokerage.
Anthony Hong 77 City Centre Drive
E. & O.E.: The information contained herein was obtained from sources which we deem reliable Research Analyst East Tower, Suite 301
and, while thought to be correct, is not guaranteed by Avison Young. Acknowledgment: Data
for graphs, charts and tables used in this report are sourced from Avison Young and Altus InSite. 905.283.2392 Mississauga, ON L5B 1M5
Some of the data in this report has been gathered from third party sources and has not been
independently verified by Avison Young. Avison Young makes no warranties or representations as
to the completeness or accuracy thereof.
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