A Toronto based real estate company released a study they completed on the state of the Toronto commercial real estate market. They have predicted that within the next three years, commercial tenants in the GTA are going to be facing huge rental cost increases as the property values rise and the market tightens.
Rising prices
Currently to rent a Class A space in the heart of Toronto’s city center, commercial tenants pay $59.17 per square foot. With increasing prices, Toronto is poised to catch up with the rates of higher demand North American cities, such as New York City. Markets across Canada are seeing an increased demand in their downtown core markets, such as Montreal, Vancouver, and Calgary.
Within the next three years Toronto commercial space renters could be facing a projected 66 percent increase in their rent. Prices are expected to rise to $88.76 per square foot.
Driving factors
There are several factors driving the increase in costs for the GTA. Currently the market faces a limited supply and a conservative, risk averse ownership profile. The real estate report also cites immigration as well as the demographic changes in businesses as a reason for the increased need for more office spaces.
Benefits for Niagara
With higher rental costs in the heart of Toronto and increasing costs in the GTA, it’s likely that new businesses will need to seek commercial spaces elsewhere. This may work into Niagara’s favour as a region of new growth. The region has already seen growth surrounding the proposed GO Transit station in Grimsby, and if the introduction of more GO Transit into the region comes, the lower rates could have a serious impact on the commercial real estate market in Niagara.
This is something that has been experienced in the residential housing markets, as Toronto prices skyrocketed. Many home buyers set their sites on the Niagara region and opted to purchase here. As commercial rental fees increase in Toronto and commercial developments continue in this region, Niagara’s commercial real estate market may see the benefits of these massive increases. For more information on the development that has occured in the Niagara region, take a look at our development map.
