The office building boom in the GTA, particularly in the city’s downtown core where four million square feet of class-A space is coming online in the next few years, has many wondering what level of disruption will be created.
Colliers Canada, for one, is not particularly concerned. Its recent Commercial Real Estate Forecast predicts the so-called FIRE sector (financial, insurance and real estate) will “take the lead in the growing office market in the Greater Toronto Area.”
Colliers is forecasting 1.7% growth from 2014-17 based on the expected push from the FIRE sector. Its report also points to improving fundamentals for downtown office: vacancy rates have fallen from 4.6% at the end of 2012 to 4.1% at the end of 2013 and net rents have risen from $24.01 to $26.30, an increase of more than 9.5%.
“I was a little surprised by how strong the FIRE sector is in that market and how stable it has been and the impact it has had on the demand,” said Curtis Scott, Colliers’ Vancouver-based national market intelligence analyst.
The analyst said Colliers is relying in part on a report from the Conference Board of Canada highlights that the FIRE sector will post high growth rates in the short term with an increase of 3.3%.