Approximately 2.2 million square feet of office space will be completed in the Greater Toronto Area this year, amid intensified demand brought about by the rapid growth of the region's tech sector.
A new analysis by Marcus & Millichap stated that Toronto’s world-renowned status as a premier tech destination has proven invaluable to the strength of its commercial market.
“An open immigration policy and mature tech ecosystem have national and international firms adding to their workforce in Toronto,” Marcus & Millichap explained. “The metro has become increasingly popular as a major hub for tech and artificial intelligence, leading companies such as Shopify, Amazon, Microsoft and many others to announce plans to bring on more workers and take up additional office space.”
This was especially apparent during Q1 2019, which saw the creation of more than 50,000 new jobs in the region, “many at the high-tech companies that have been driving office absorption.”
“Large supply influx brings more options to Toronto,” the report noted. “The vast majority of construction is occurring downtown, where roughly 8.6 million square feet is scheduled for delivery by 2022.”
The drive for more expansive spaces has spurred this fevered pace of construction, but demand remains undeterred as the GTA has one of the lowest commercial vacancy rates in North America.
“This has contributed to rent growth that has outperformed the national rate, rising almost 26% over the past five years. Another year of exceptional space demand will compress the market vacancy rate to its lowest point of the cycle, supporting healthy rent gains.”