Canada’s real estate market has already embarked upon a steady revival, particularly in the residential segment where there were a few fluctuations earlier. With several housing markets now witnessing steady growth again, it is time to closely observe the latest trends in the Canadian commercial real estate space. This is a space which has been booming for a very long time, driven by lower vacancy rates, economic growth, lower unemployment levels and a pro-active environment for growth and expansion of businesses in major Canadian cities.
It is also a given that whenever there is a boom in commercial real estate, it will rub off positively on the residential, retail and logistics sectors alike. Here’s looking at two of the biggest developments in the Canadian commercial realty space recently.
Amazon takes up whole Canada Post building
Amazon has leased the entire Canada Post building located in downtown Vancouver. This mega development is enough when it comes to lowering Vancouver’s forecasted office space vacancy rates by a whopping 2% as per reports. Amazon has already agreed to lease out the 1.13 million sq. ft. of space present in the dual tower structure named The Post. This was the former site of the Canada Post at Georgia Street and is currently being extensively redeveloped. Office space vacancy rates are presently around the 2.4% mark for downtown Vancouver which is almost the lowest threshold in North America overall.
4.2 million sq. ft. of office space is being built in downtown Vancouver currently as per reports. Once Amazon takes over The Post building, it will own a total office space footprint of a whopping 1.5 million sq. ft. throughout multiple locations. The redevelopment project will cover two office space towers along with a mixed-use podium. It is expected to be finished by mid-2023 and will have working space for around 7,000 people.
Bay Street in Toronto retains top spot as Canada’s costliest office space location
Bay Street has retained its spot on top of the list as Canada’s costliest street for office space tenants. The average rentals here stand at $77.96 per square foot which indicates growth of 11.1% as compared to the year 2017 as per reports. At number two on the list, there is Burrard Street in Vancouver. This goes through the center of the office district in the city till the downtown waterfront area with average rentals of approximately $66.25 per square foot. This rate has gone up by 7.7% from the year 2017. The third name in the list is Avenue des Canediens-de Montreal in Montreal which has average rentals at $55.38 per square foot. This has grown by 6.1% from 2017 as per reports.
The costliest office space locations are all situated in downtown zones as per experts, indicating the boom in the commercial realty space in these locations. Most of these costly markets are driven by the growth of the technology sector and this is a trend that is going to continue, covering Kitchener and Ottawa as well. Calgary has been one exception, coming down in the list ever since 2014’s oil crash. It is now at number 6 in the list as per studies.
101 Street in Edmonton is at number 4 in the list with $48.89 per square foot being the average rental rate, followed by Ottawa’s Albert Street at number 5 and 8th Avenue SW in Calgary at number 6. Other members of the top 10 list include King Street West in Downtown Kitchener at number 9 and Upper Water Street in Halifax at the 8th position. The 7th and 10th slots are taken up by Main Street, Winnipeg and Laurier Blvd, Quebec City respectively.
Other market trends worth noting
Rentals have been increasing swiftly in Vancouver and Toronto on the back of ever-growing demand that has clearly outstripped supply levels. Toronto has the lowest vacancy rate in its downtown area for any city in North America while Vancouver has the second lowest vacancy rate as well. Landlords are hence scaling up rentals due to lower supply and these markets have witnessed growth in double digits in this regard.
Most big tenants including globally acclaimed technology companies, wish to operate in the downtown core zone in order to be located strategically near key amenities and transit facilities. 4.5 million sq. ft. and 10 million sq. ft. of office space are being constructed in Vancouver and Toronto currently as per reports. New office towers are majorly coming up near and in Georgia Street in Vancouver which is in the eastern portion of the downtown core and located a few blocks away from the city’s traditional business and financial district. Vancouver and Toronto continue to draw more tenants in spite of their higher average rental rates since they are still more attractive propositions as compared to cities such as New York, San Francisco and Boston according to experts.