Toronto's vacancy continues to shrink and retains its title as the tightest major metropolitan in North America. Toronto's Central Business District is now at 1.4% vacancy.
As large-block opportunities continue to dwindle across the Greater Toronto Area, tenants are beginning their real estate exercises sooner than ever to find a competitive edge. Tenants are now starting at least two years in advance, a shift from the traditional 12-18 month outlook.
This Quarter saw many developments in the Downtown Market announce anchor tenants and commence its construction phase. The Well, the 1.6 million square foot multi-use development by REITs RioCan and Allied Properties announced three anchor tenants: Index Exchange, Shopify and Spaces. Bay-Adelaide North, the third and final development of the Bay-Adelaide Centre by Brookfield Properties announced Scotiabank would be committing to 51% of the 842,000 SF development. Microsoft opted to double-down on its Downtown presence, announcing their new Canadian Head Office in 81 Bay Street.
Absorption amongst existing inventory this quarter picks back up on the pace 2017 set. While none of the markets broke preexisting absorption records, the GTA West, GTA North, and Downtown Markets came close.
Weighted average asking net rents grew 7.5 percent ($2.30 PSF) QoQ, indicative that landlords may be taking an aggressive position on the market's outlook. The single-fastest growing submarket was the Downtown North, where weighted average asking net rents among A-Class product grew $6.49.