Last Friday the Toronto Star published an article talking about the growing demand for character office buildings in submarkets outside of Toronto’s core. Specifically, it was talking about the Downtown West and Liberty Village submarkets (citing a report from CBRE).
I’m sure this isn’t news to most of you. Cool loft spaces have been popular for years. But it’s interesting to look at how rents and vacancy rates have changed for these submarkets and product types over time.
Since 2002, average (net) asking rents for brick-and-beam buildings in the west end have gone from $16.12 to $22.23 per square foot. Almost a 38% increase. By comparison, office space in the core has gone from $28.40 to $32.38 per square foot. A 14% increase.
And if you look at vacancy rates since 2007, you’ll see that the character office market has really tightened up over the past 4 years or so. There’s growing demand for a limited amount of supply.
With the growth that the downtown core is seeing and with the rise of Toronto as a creative startup hub, I’m sure we’ll continue to see strong demand for this type of space. But there’s only so much of it to go around. So I think we’ll also end up seeing greater interest in the east side of downtown and also more interesting new builds.