Commercial Real Estate Facts Toronto – November 2009

Novemeber 2009

Most industry professionals feel that business volume is down, but by how much?  We have heard, in conversations over the past 6 months, many questimates of ‘how much’, “100%”, “50%” or ”nothing is happening” so we thought you’d like to know some facts.  We track every move into and out of space through out the GTA. The November issue of Quick Facts will focus on the transaction trends. These transactions are either direct or sublet new deals, expansion or relocations in a building.

GTA – The volume of new lease transactions – area leased.

Since the abatement of Sars and the 911 tragedy the volume of transactions each quarter has steadily trended upward from the beginning of 2004 until the fall of 2007. Since then the volume has noticeably fallen off to the point where it may reach the lowest level since we began keeping consistent and accurate records.  ‘Transaction Volume’ gives our customers a 6 month head start in managing new market trends.

Each time a transaction is sourced we record the type of transaction and its size at the time of negotiation.  Major deals (+10K) are researched directly with the participants in the deal. If the deal is below 5,000 sq ft and we do not know the transaction date then we estimate when the deal was done.  The results of this research shows clear trends and usually well in advance of other indicators

GTA – The volume of new lease transactions – Number of leases.

The number of transactions started to fall off very radically in the fall of 2008.  This is not terribly surprising except that the volume of deals done has never been lower since 2001 literally the volume (number) of deals done has dropped in half in 12 months.  Though the final count in the 3^rd quarter may still rise it’s not expected to move much past 400 for the quarter.

We have intentionally not included our industry leading renewal data because we can not confirm on a consistent basis all renewals.  We presently have recorded over 5,000 renewal transactions but it is very hard to say what proportion of the market that represents.

West End – signs (faint) of recovery?

Last month we said that the West End is lagging behind the financial core in its recovery path. For the first time in the last 6 months we are actually projecting an increase in occupancy in the region.  This projection is based on an accumulation of known new moves and is a result of the research we conduct on the transaction portion of the database.

This trend may continue. The drivers for the office market are not related to the financial services sector rather leaning more to the industrial dependent uses. The recovery has not yet seen industrial based industries return to health causing many to hold back on relocation and expansion plans. But this appears to be changing.

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