Vacancy Rates Drop As Demand Skyrockets On Commercial Properties In Toronto
The vacancy rate in the Greater Toronto Area for commercial real estate is forecasted to decline to 4.4% this year. This is among the lowest rates in North America. The strong demand for commercial space has been instrumental in supporting rent growth, which has climbed by 26% in the past few years. Positive absorption of commercial space, coupled with unyielding demand, will continue to push down the vacancy rate while elevating rent prices. Although there is an increase in rapid construction projects that will add 2.2 million square feet of commercial space by the end of this year, and 8.6 million square feet by 2022, this is unlikely to ease office space shortages.
Firms in the tech sector are the most substantial contributors to high demand for commercial properties. Toronto’s status has ascended to that of a global leader in the tech industry. Toronto Tech firms have been profiting from the country’s open immigration system, a regionally integrated tech industry, and highly educated workers graduating from the region’s many educational institutions. Top companies such as Amazon, Microsoft, and IBM are expanding their offices and increasing their workforce in the city. Thousands of the 50,000 new jobs created in the beginning of 2019 were in the tech sector, providing little relief for the increasing scarcity of office space.
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