The Canadian commercial real estate market is making a comeback, according to TD Bank. In 2011, $21 billion in assets changed hands, and this figure represents a significant increase over the $10 billion in sales recorded in 2009. Market conditions in Canadian cities have tightened over the last 12-18 months due to increased demand and lower inventory levels.
The tight market conditions are leading to new construction in locations around the country. A number of major shopping malls have announced plans to renovate and a number of new office towers are slated for construction.
Toronto is currently experiencing a building boom in its office towers, with 16 new buildings under development at present. These additions to the city’s landscape will add a much-needed four million square feet of new commercial space over the next three-four years.
If the Ontario government follows through with plans to reduce the number of square feet of each civil servant’s workspace from 250 square feet to 200, the amount available office space will increase is predicted to rise to five million square feet over the next few years. This single move would free up the amount of office space as a 43-story office tower in the city’s downtown business district.
Until the new office buildings are ready for tenants in 2013-14, the commercial market is expected to remain tight and rents will stay high. The boom in the city’s condominium market is also at play here, with retailers and other businesses wanting to set up in prime locations close to the downtown core to be in proximity to a steady stream of consumers.
A number of Class A office towers in the city’s financial district are currently undergoing major renovations and upgrades, which also means has an impact on commercial vacancy rates. Class B and C properties are not remaining vacant for very long in the current market, which is great news for landlords.
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