toronto commercial real estate, toronto office space

1. greater toronto area
COLLIERS INTERNATIONAL | MARKET REPORT & FORECAST
www.colliers.com/toronto
Canadian Market Overview
MARKET INDICATORS
Q3 2010
OFFICE INVENTORY ~
NET ABSORPTION ~
VACANCY RATE 
AVERAGE ASKING NET RENT ~
AVERAGE ADDITIONAL RENT |}
As the third quarter of 2010 comes to a close, the economic climate remains cautiously
optimistic with the recovery still fragile. Warren Buffett recently stated he does not see
signs of the U.S. headed for a double dip, though that may bring little comfort for the
unemployed as everyone watches to see if unemployment numbers improve.
GDP growth in the first half of this year surprised many with a strong showing at 5.8
percent. Depletion of inventories, unleashed pent-up demand, and fiscal and monetary
stimulus have all contributed to this astounding growth. As we enter into the second half of
2010, GDP is expected to grow at a more subdued level of about 2.0 percent (annualized)
due in part to a weak U.S. recovery, an increasingly fatigued consumer, and the easing of
monetary and fiscal stimulus that were needed to stave off a global recession.
GTA Office Market Overview
The Greater Toronto Area (GTA) office market gradually regained stability in 2010 as a
healthy availability rate was established at approximately 10.5 percent for the past 12
months. The vacancy rate remained stable for the past four consecutive quarters at 6.5
percent, despite the completion of many new buildings during the last two years. All five
Q3 2010 | OFFICE
Midtown
Downtown
GTA East
GTA West
GTA North

2. GTA markets reported minimal positive
net absorption which has yet to affect the
overall vacancy rate. Average asking net
rent fluctuated marginally within a range
of $16.25 to $16.35. Although some areas
appeared to be more competitive than
others, the overall GTA office market held
on to a tenant-favoured sentiment, with
opportunities for tenants to optimize their
real estate strategies.
In comparison to the central area, suburban
markets reported higher vacancy rates and
subsequently, a larger sublease market. GTA
East and GTA West contributed to 55 percent
of the total vacant space in the GTA and
correspondingly, 20.6 percent of available
space in suburban GTA was for sublease,
versus 13.5 percent in GTA central.
Across the GTA, all markets showed a
return of activity, which is anticipated to
increase positive absorption. Occupancy
rates should continue to increase as no
major new supply is expected in the market
in the near future. Average asking net rent is
expected to dip slightly over the balance of
2010 and gradually pick up in the following
six to nine months. The office market overall
is forecasted to stabilize in the short term
and shift to a landlord’s market by the end
of next year as supply is depleted.
Using office employment growth as a proxy
for office space demand, vacancy rates are
expected to rise marginally by the end of
this year and decline to around 6.1 percent
in 12 months. Average asking net rent is
projected to increase steadily to $16.38 per
square foot by the end of Q3 2011.
FORECAST
Source: Colliers International, August 2010
Net New Supply Asking Net Rent Vacancy Rate
2000
0.0%
12.0%
$0
$5
$10
$15
$20
$25
$30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1 2 3 4 1 2 3 4 1 2 3 4
4.0%
6.0%
8.0%
10.0%
NetRent$/PSF/NetNewSupply(100,000SF)
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
$16.26
6.5%
GTA | HISTORICAL PERFORMANCE & FORECAST | Q1 2000 - Q3 2012F
GTA Office Market Overview (continued)
P. 2 | COLLIERS INTERNATIONAL
MARKET REPORT & FORECAST | Q3 2010 | OFFICE | GREATER TORONTO AREA

3. GTA Downtown
THE MARKET
The gradual expansion of the Finance,
Insurance and Real Estate (FIRE) sector
has been one of the primary drivers of the
downtown market over the past five quarters.
Somemid-sizecompanieshavebeenactivein
the downtown market outside of the financial
core, while smaller companies do not have
a strong presence in this market. Renewals
have been predominant in the marketplace
and tenants have remained cautious, thus
placing some downward pressure on rental
rates in order to retain the competitiveness
of available space.
TRENDS
GTA Downtown has been stabilizing in both
vacancy and rent performance.The vacancy
rate has been continuously increasing since
Q4 2007, but its pace slowed in the past
year to settle at 5.6 percent by Q3 2010.
After a significant decline of 9.7 percent in
Q3 2009, average asking net rents hovered
at approximately $21 for the past year.
FORECAST
Rental rates are predicted to remain
steady in the short term and eventually
increase in the second half of 2011 as
the market becomes more favorable to
landlords. It is foreseeable that vacancy
rates for Class A and AAA buildings will
go up by the end of this year as some
large tenants have decided to relocate
outside of the financial core. Going into
2011, the return of strong activity is
expected to turn into positive absorption.
Similar to the GTA market as a whole, the
downtown vacancy rate is projected to
experience a minimal increase followed by
a decline in 2011. Average asking net rent is
expected to increase steadily to $21.34 per
square foot by the end of Q3 2011.
FORECAST
Source: Colliers International, August 2010
Net New Supply Asking Net Rent Vacancy Rate
2000
0.0%
9.0%
12.0%
18.0%
$0
$5
$10
$15
$20
$25
$30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1 2 3 4 1 2 3 4 1 2 3 4
3.0%
6.0%
15.0%
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
NetRent$/PSF/NetNewSupply(100,000SF)
$15.97
5.6%
GTA DOWNTOWN | HISTORICAL PERFORMANCE & FORECAST | Q1 2000 - Q3 2012F
COLLIERS INTERNATIONAL | P. 3
MARKET REPORT & FORECAST | Q3 2010 | INDUSTRIAL | GREATER TORONTO AREA

4. GTA Midtown
THE MARKET
With limited new supply, the GTA Midtown
market has not experienced much change.
Both Yonge-Bloor and Yonge-St.Clair
submarkets had low vacancy rates of four
percent and five percent respectively, and
low transaction volumes. With only a few
large contiguous spaces available in those
two areas, smaller deals have been driving
these submarkets. Yonge-Eglinton had a
much higher vacancy rate of seven percent
in comparison to the other two submarkets,
which was due to an elevated vacancy rate
in Class A buildings.
TRENDS
The GTA Midtown market has followed
the trend of the GTA overall in terms of
stabilization. After a moderate increase
of 0.3 percent in the second quarter, the
vacancy rate of the midtown market returned
to 4.7 percent, the same level observed in the
second half of 2009 and early 2010. Average
asking net rent has declined since Q4 2008
and but has steadied at around $16 per
square foot in the last three quarters.
FORECAST
The midtown market is forecasted to remain
flat for the rest of 2010 and most of 2011.
With some available sublease space coming
onto the market, the vacancy rate is expected
to slightly increase in the short term , but
overall the market is tight. As the economy
improves, rents should go up by the middle
of next year, which will make it more difficult
to get deals done.
Colliers projects the GTA Midtown vacancy
rate will remain at 4.7 percent for most of
2011 and that average asking net rents will
marginally trend upwards.
FORECAST
Source: Colliers International, August 2010
Net New Supply Asking Net Rent Vacancy Rate
2000
4.0%
10.0%
$0
$2
$6
$10
$14
$16
$20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1 2 3 4 1 2 3 4 1 2 3 4
$18
$12
$8
$4
2.0%
6.0%
8.0%
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
NetRent$/PSF/NetNewSupply(100,000SF)
$15.97
4.7%
GTA MIDTOWN | HISTORICAL PERFORMANCE & FORECAST | Q1 2000 - Q3 2012F
P. 4 | COLLIERS INTERNATIONAL
MARKET REPORT & FORECAST | Q3 2010 | OFFICE | GREATER TORONTO AREA

5. THE MARKET
The GTA North office market has maintained
a vacancy rate of below five percent since
the Q2 2007 and based on this indicator, is
considered to be the healthiest market across
all other GTA submarkets. This is partially due
to the tight supply of the smaller submarkets,
such as Dufferin-Finch and Richmond Hill.
Similar to other markets in the GTA, activity
levels have been rising in GTA North over the
past quarter due to increased tenant demand.
TRENDS
Since the beginning of Q1 2010, vacancy
levels have moderately dropped 5.1 percent
to 4.7 percent as transactions from 2009
closed. Average asking net rents responded
with consistent increases to a ten-year
record high of $18.22 per square foot. Net
absorption recovered from a first quarter
loss of 112,383 square feet and began to
show improvement in the last two quarters
with a total gain of 305,913 square feet.
FORECAST
Minor changes are anticipated in the GTA
North market and sublease absorption
should continue to keep the momentum
going. Similar to other markets, activity levels
will continue to improve.
Colliers expects that mild positive net
absorption will drive the vacancy rate to 3.9
percent over the next 12 months and average
asking net rents should respond with an
increase to $18.34 per square foot.
GTA North
FORECAST
Source: Colliers International, August 2010
Net New Supply Asking Net Rent Vacancy Rate
2000
1.0%
6.0%
12.0%
$0
$10
$15
$25
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1 2 3 4 1 2 3 4 1 2 3 4
$20
$5
2.0%
4.0%
10.0%
8.0%
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
NetRent$/PSF/NetNewSupply(100,000SF)
$18.22
4.1%
GTA NORTH | HISTORICAL PERFORMANCE & FORECAST | Q1 2000 - Q3 2012F
COLLIERS INTERNATIONAL | P. 5
MARKET REPORT & FORECAST | Q3 2010 | INDUSTRIAL | GREATER TORONTO AREA

6. GTA East
THE MARKET
GTA East has the highest vacancy rate in the
GTA as a whole at 8.1 percent. Submarkets
in this region quoted rental rates of $13.19—
far below the GTA average of $16.26
per square foot. Nodes in the southern
part of the GTA East market have stayed
competitive, such as Consumers Road and
Woodbine-Steeles. However, Scarborough
has experienced challenges in attracting
tenants and continues to have a high level of
available space at approximately 4,130,000
square feet.
TRENDS
AverageaskingnetrentsforGTAEastreached
the bottom of the recessionary trough in
Q3 2009 and have increased marginally to
$13.19 in the last quarter, the lowest among
all GTA markets. The vacancy rate fluctuated
between 7.8 percent in Q1 and 8.1 percent in
Q3. Leasing activity has improved in most of
the submarkets resulting in a positive change
in net absorption from -342,572 square feet
in Q2 to 423,541 square feet in Q3.
FORECAST
Colliers expects the GTA East market to
remain constant overall, with moderate
positive absorption driven by better
performing areas such as Markham and
Woodbine-Steeles.
Vacancy rates are expected to trend
downwards to 7.9 percent by Q3 2011, with
average asking net rent increasing to $13.25
per square foot.
FORECAST
Source: Colliers International, August 2010
Net New Supply Asking Net Rent Vacancy Rate
2000
1.0%
7.0%
9.0%
15.0%
$0
$2
$6
$10
$12
$16
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1 2 3 4 1 2 3 4 1 2 3 4
$14
$8
$4
3.0%
5.0%
13.0%
11.0%
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
NetRent$/PSF/NetNewSupply(100,000SF)
$13.19
8.1%
GTA EAST | HISTORICAL PERFORMANCE & FORECAST | Q1 2000 - Q3 2012F
P. 6 | COLLIERS INTERNATIONAL
MARKET REPORT & FORECAST | Q3 2010 | OFFICE | GREATER TORONTO AREA

7. THE MARKET
While consistent activity was observed
during the past quarter in the GTA West
market, the performance of office leasing
varied among submarkets and building
types. Areas such as the Airport Corporate
Centre continued to experience challenges
and had a vacancy rate of 16.7 percent, the
highest among all GTA submarkets. With
limited supply of larger spaces, landlords
had more negotiating strength within that
product category, while smaller office
spaces faced additional competition from
the sublease market.
TRENDS
With the vacancy rate remaining fairly
constant at approximately 8.2 percent for
the last three consecutive quarters, GTA
West office markets are steady. Asking net
rents showed mild fluctuation in the past
12 months and declined from $15.30 in Q1
to $14.95 per square foot in Q3.
FORECAST
The GTA West market is projected to have
stronger activity as available sublease
space is absorbed and the overall vacancy
rate declines.
Colliers anticipates the vacancy rate to drop
to 6.8 percent a year from now and foresees
a higher average asking net rent of around
$15.35 per square foot by Q3 2011.
GTA West
FORECAST
Source: Colliers International, August 2010
Net New Supply Asking Net Rent Vacancy Rate
2000
0.0%
6.0%
8.0%
14.0%
$0
$2
$6
$10
$12
$14
$18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1 2 3 4 1 2 3 4 1 2 3 4
$16
$8
$4
2.0%
4.0%
12.0%
10.0%
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
NetRent$/PSF/NetNewSupply(100,000SF)
$14.95
8.2%
GTA WEST | HISTORICAL PERFORMANCE & FORECAST | Q1 2000 - Q3 2012F
COLLIERS INTERNATIONAL | P. 7
MARKET REPORT & FORECAST | Q3 2010 | INDUSTRIAL | GREATER TORONTO AREA

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MARKET REPORT & FORECAST | Q3 2010 | OFFICE | GREATER TORONTO AREA