Written by Ontario Construction News staff
According to Avison Young’s Mid-Year 2019 Global Office Report, some of the world’s larger markets are finding it tough to meet demand for office space, spurring on plenty of urban development.
The report, which looked at 79 office markets in eight countries globally, found that in spite of political concerns and a forecasted slowdown in economic growth, strong economies and labour markets are creating plenty of demand for workspace in cities
“We continue to see significant development in urban areas of major metropolitan markets across all countries in which we operate. The impact can be seen on city skylines, which are changing rapidly, and in the delivery of new forms of workspace driven by organizations that are constantly adapting to their changing workforces and new technologies,” said Mark E. Rose, chair and CEO of Avison Young.
“The large development pipeline is being more than offset by robust demand. This situation is particularly true for good-quality class A space with preleasing levels at historic highs,” Rose said.
Of the 79 surveyed markets, two-thirds of them experienced a flat or declining vacancy rate. Occupancy is up 12 per cent compared with the previous 12 month period.
Speaking of changing skylines, the report notes that construction cranes are a fixture in many of these same markets, as developers continue to respond to demand with new space. This particular metric is evident in Toronto, as a recent The Rider Levett Bucknall (RLB) Crane Index put the city in the top spot for number of cranes visible on the city’s skyline
Increasing the need for office space are changes to the work spaces themselves
“The most significant story now is the proliferation of co-working space,” Rose said. “The ever-increasing demand for flexibility from occupiers, as well as the evolution of technology, has resulted in a co-working boom across the globe. This growth has led to new markets being opened for providers of shared workspace.”
Unsurprisingly, demand in Canada is strongest in Toronto, Montreal, and Vancouver. Calgary also increased its demand from the previous year. Toronto accounts for more than half of the country’s increased demand, while Vancouver marks the lowest office space vacancy rate int eh country.
“The labour market remains the major catalyst for Canada’s economic expansion and thriving commercial real estate sector,” says Mark Fieder, Avison Young principal and president for Canada. “Urban intensification boosted by immigration, a growing knowledge-based economy and the rising co-working industry have powered Canada’s office market.
Toronto had the most downtown office space under construction in Canada, trailing only New York among North American markets.