Since the beginning of the century, the construction of new offices has focused on downtown Toronto, leaving the suburbs as dormitory cities and nothing else.
According to the CoStar Group, a major multinational firm analyzing commercial real estate data, the construction of suburban offices has followed almost the pace of construction in downtown Toronto in recent years, a trend that is forecast to continue for at least the next five years.
“Over the past decade, we have heard that large companies move their offices to the city center, a somewhat different trend. Most employees want to avoid commute. However, there are other companies that prefer to stay outside the city. “. said Roelof van Dijk, CoStar market economist for Canada.
While avoiding the long trip to the suburbs is undoubtedly a key reason, van Dijk says that population growth provides a better idea of why the suburbs are more prepared for growth in office space.
“When you look at where the population is growing and where the new supply per square meter is happening, it is revealing,” Van Dijk continued. “It’s the closest to 50-50 you’ll get in a 10 year period. There was also a supply boom in the city center during that same period.”
In fact, the analyzes provided to CREW by CoStar show that between 2014 and 2024, downtown Toronto has approximately 52% of the construction share with the remaining 48% in the suburbs.
“When you look at the actual construction, it is not a story when you hear about small offices in the suburbs,” van Dijk said. “The story is 1.5 million square feet in CIBC Plaza.”
Another prominent factor for the growth of office space in the immediate suburbs of Toronto is the transit service. Mississauga is intensifying and, in the process, is losing its reputation as a giant banal suburb of Toronto, and the Vaughan Metropolitan Center has a subway station that connects it to the Toronto core.
“The office space in downtown Toronto is fortified by public transportation, but the main point for the suburban office market is where do you see health and continued growth? It will be in more urbanized suburbs, such as Mississauga City Center and Scarborough Town Center, in downtown Markham, Vaughan Metropolitan Center, ”said van Dijk. “Unusual places that do not have a higher order public transport service, whether LRT or Bus Rapid Transit, will experience weakness.”
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