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In a city with some of the most severe congestion and traffic issues in the Americas, business owners in Toronto are embracing public transit more than ever. A new report on Rapid Public Transit Infrastructure from Colliers International reveals a connection between the financial success of a commercial property and its proximity to rapid transit infrastructure, analyzing office leasing and transportation data from around the GTA to determine the correlation.
Using findings from Colliers’ larger analysis of relationships between rapid public transportation infrastructure and the commercial real estate industry, the report also gives a clear message to developers that office leasing tenants and commercial real estate purchasers have a high demand for GTA properties in walking range of rapid transit.
“The GTA office markets with more than 60 per cent of their total office space within 400 metres—or walking distance—of rapid transit have a higher average rental rate and lower average vacancy rates than the rest of the GTA”, said John Arnoldi, Colliers International’s director in Toronto. “Employees have spoken: they want to work within walking distance of where they can take transit to – they no longer wish to drive.”
To attract the growing demographic of young, urban professionals who would rather avoid our overburdened highway network, an increasing number of businesses are demanding locations within easy walking distance of transit stations. The report finds that office buildings situated within close proximity to rapid transit have shown steady positive absorption, higher asking rental rates, lower vacancy rates and faster pre-leasing cycles.
“The current transit infrastructure within the GTA is over capacity, with daily average commutes now more than 65 minutes. Employees have simply had enough of sitting in cars that go nowhere,” said Arnoldi. “The region’s highway infrastructure is especially overburdened with little to no room to grow, placing even more importance on the usage and expansion of rapid transit. With various levels of government focused on expanding the GTA’s rapid transit capabilities, this represents an important opportunity, and an absolute priority, to maintain one of North America’s most competitive and robust commercial office markets.”
We reached out to Shawn Gilligan of Colliers for further comment, asking if the trend highlighted in the report are noticeable across the city, or if there are some areas along transit lines that haven’t yet seen a boost.
"There are only a limited number of employment districts outside the downtown core in which rapid transit is available, and these areas are seeing an increase in demand for office space that is close to rapid transit", said Gilligan. "For example, office space within walking distance to rapid transit at Yonge and Sheppard is experiencing high demand. Rental rates are increasing, while vacancy and availability rates remain low. With regard to development along the Sheppard subway line, the neighborhoods along this line, other than Sheppard-Yonge station, are designated as residential zones limiting the office development possible in these communities."
With two rapid major transit projects currently under construction in Toronto, and several future projects on the horizon, the supply of land in markets to get access could help to keep the commercial real estate market competitive well into the future. The ongoing York-Spadina Subway Extension is already spurring the growth of a new mixed-use hub surrounding the future Vaughan Metropolitan Centre subway station, and the construction of the Eglinton Crosstown LRT line is also expected to foster commercial growth in Midtown Toronto, while the Port Lands, for example, will need a Relief subway line, a GO RER station, and LRT for it to reach its full potential.
