Toronto Office Space for Rent
For businesses operating in Canadian markets, Toronto will likely be the first place to look for office space and set up headquarters. Toronto is the by many measures the heart of the Canadian economy – accounting for 20 percent of Canada’s national GDP by itself – with outsized financial and manufacturing industries in the area.
The largest city in Canada and the fifth largest city in North America – about nearly 3 million live in city limits and more than 3 million more live in the metro area – Toronto is a hub of commerce, finance, entertainment, arts, and culture. A destination for countless immigrants throughout its history, Toronto is also considered among the most diverse and cosmopolitan cities in the world, with more than 200 ethnic groups represented and more than 160 different languages spoken by its inhabitants.
Toronto is also home to the Toronto Stock Exchange, the five largest banks in Canada, the tallest freestanding structure in the western hemisphere, and nearly 87,000 businesses of all sizes.
With almost 200 million square feet of office space located throughout the many distinct neighborhoods, Toronto is likely the most culturally and economically influential city in Canada and the place to be in the thick of nation’s commercial and financial sectors.
Toronto Office Space | Lease Data and Trends
|Asking Rent||Vacancy Rate|
|North Toronto Suburbs||$30||10%|
|East Toronto Suburbs||$37||7.5%|
|West Toronto Suburbs||$31||13%|
While Toronto is generally experiencing a strong economy and shrinking unemployment, the downside to those trends is exceptionally high demand for office space throughout the city – and therefore minimal availability.
Although about 11 percent of the Toronto metro area’s nearly 178 million square feet of office space was vacant earlier this year, those available spaces are generally concentrated on the east and west suburbs. In stark contrast, the city-center submarkets’ overall vacancy rates barely topped 3 percent at best, with the whole downtown area having nearly 2 million square feet available for rent out of its inventory of more than 74 million. Given that demand, it’s not surprising that renting in Toronto can come at a steep price.
While the average rent per square foot is just over $42, that jumps to well over $50 for any submarket in the city’s core. Class A space specifically goes for higher than $63 per square foot in the financial district, about $53 Downtown, and about $50 in Midtown.
However, the crunch for office space may be alleviated when buildings under construction come online, which will deliver about 4 million square feet downtown by the reckoning of some observers. The city government reports 7.4 million in development downtown, at least some of which will be in the roughly 200 mid-rise and high-rise skyscrapers under construction.
Prices even out further outside the city’s core, with North Toronto coming in at nearly $38 per square foot, and prices approximately $5 less per square foot on the east and west sides of the city.
What Our Brokers Say About Toronto Office Space for Rent
With the extraordinarily high demand for office space in the city center, any businesses looking to move to or within Toronto’s central submarkets should expect high prices, few concessions, and stiff competition for any vacancy they may find. Even settled businesses are likely to experience rising rents in a market that currently favors the landlord.
Although conditions aren’t likely to get better for prospective renters for at least two years, the tight market is symptomatic of the strong economy that makes Toronto such a popular place to be.
Unemployment has continued its downward trend to well below 7 percent for the city and below 5 percent for the region, while wages are generally trending upward. Toronto’s GDP growth has also been stronger than expected at more than 3 percent year over year in the last few years, but that’s expected to slow to just over 2 percent this year and beyond.
Anyone already in Toronto can see the progress on the inventory that will dramatically change the city skyline when it comes online between 2020 and 2022 – such as the giant, excavator-dotted pit on Spadina Avenue that will eventually become The Well, an eight-acre, seven-building complex that will include a 36-storey building with 1.1 million square feet of office space. Another is CIBC Square I, a 49-story building under construction at 81 Bay Street and to be followed by a second 54-story tower, both of which will add nearly 3 million square feet of new office space on the southern edge of downtown. However, the office space opening in these new buildings is already being scooped up nearly as fast as plans are announced.
Such is the case with Cadillac Fairview’s two developing towers, both along the southern edges of the financial district. Firms that include anchor First National Financial have already signed on for more than 50 percent of the 33-story 16 York building’s 900,000 square feet that will be ready in 2020. Additionally, the Ontario Teachers’ Pension Plan has already signed for about a fifth of the 1.2 million square feet that will be available at a new 46-story tower at 160 Front Street West, which isn’t even slated to begin construction until 2019 and open until 2022.
While the Toronto office space market is tightest in the downtown core, the lack of new inventory opening soon is likely to slow growth a bit and push some of the benefits out to the suburbs in the near future.
Popular Neighborhoods to Rent Office Space in Toronto
As the name suggests, the small section of Toronto’s downtown is the heart of all of Canada’s financial sector. Within an area that’s no more than two-and-a-half blocks wide and six blocks long sits the nation’s largest stock market, the Toronto Stock Exchange, and the headquarters of the five largest banks in the country, such as the Canadian Imperial Bank of Commerce and Scotiabank. With so much action, the Financial District is the most prestigious, competitive, and expensive place to rent office space in Toronto. However, it’s also among the most walkable areas of the city, and it has virtually a stop on every block for a streetcar, bus route, or subway line.
Entertainment District – Downtown
Often lumped with the Financial District and similarly descriptive with its name, the Entertainment District is Toronto’s epicenter of performance, sports, and culture. The centerpiece of the local tourism economy, this sector of downtown can keep anyone occupied from morning to night with a visit to Ripley’s Aquarium of Canada, arenas to see professional hockey, basketball, and baseball, and theaters to see touring musicals, the local symphony, or independent films. It also is home to the CN Tower, the tallest freestanding structure in the western hemisphere.
Although the entertainment district has far more hotels and high-rise condo buildings than offices, it’s location still makes it a coveted spot for businesses, especially ones involved in entertainment and tourism, like the broadcasting headquarters of the Canadian Broadcasting Company and the Toronto International Film Festival’s Bell Lightbox theater. The area is among the most walkable and easy-to-reach sections of the city, and also covered with public transportation lines.
A subsection of the city north of downtown but mainly within the historical, pre-amalgamation borders of the City of Toronto, Midtown encompasses a wide array of unique neighborhoods that are difficult to generalize. Neighborhoods here run the gamut from the student-dominated Annex to the swanky boutiques and restaurants of Yorkville and the old mansions of Rosedale and Forest Hill.
With so much pressure downtown, some of the office market has spilled into Midtown and made put an equal strain on its inventory. With more than 16 million square feet of office space, this sector recently posted a vacancy rate of less than 3 percent, with vacant spots averaging about $50 per square foot.
Not to be confused with the neighborhood of Old Toronto, North Toronto refers in this case to a swath of Toronto’s northernmost current city limits, roughly along the lines of North York and beyond.
While it’s inventory of office space is less than half of those in eastern and western Toronto submarkets, North Toronto has nonetheless reaped a bigger share of the spillover from the city center markets. With a stock of about 15 million square feet, North Toronto lately posted a vacancy rate of about 7 percent and an average renting price of nearly $38 per square foot.
Given that North York was its own city up until 1998, the area has many corporate centers that include the Canadian headquarters of both McDonald’s and Home Depot.
An independent city just outside the northern limits of Toronto, Vaughan is likely best known for its recreational destinations such as the 330-acre Canada’s Wonderland amusement park, and the sprawling, 200-store Vaughan Mills shopping center.
However, the city is also becoming a growing commercial hub, with more than 200,000 jobs, 11,000 businesses, and an average job growth rate of more than 3 percent from 2006 to 2016, according to the city’s data.
Some of its larger businesses include the Toys “R” Us Canada headquarters – which has vowed to soldier on despite the demise of its American and British counterparts – as well as the TC Transcontinental printing facility for the Toronto Star and the National Post and Canadian National Railway’s MacMillan Yard.