860 
CBRE has released their Toronto Office MarketView report for Q3 2015, showing relatively consistent market conditions in the GTA. During this period, the GTA market saw negligible net absorption, with a 20 basis point increase in vacancy rate to 9.9% from 9.7%, and a 2.1% decrease in net rental rate. In dollar terms, this brought the average net rental rate down from $18.61 to $18.22 per square foot, a trend partly driven by the high-end office space taken off the market in the Midtown area.
The report highlights a growing disparity between Downtown and Suburban markets. Increased tenant demand in Central Toronto led to a positive net absorption in 8 of 10 submarkets, while the Central Toronto vacancy rate decreased by 40 basis points to 5.4%, dropping to a one-year low. As tenants flocked to the city centre, however, the suburban office market saw vacancy increase by 90 basis points to 15.1% quarter-over-quarter—an 11-year high—representing the continuation of a slow decline in the Suburban market.
According to the report, an 8.8% increase in occupied space in Downtown and Midtown over the last five years can be attributed to healthy demand for new buildings and back-filling of vacated space in existing buildings. Despite this, the Downtown vacancy rate is expected to rise over the next two years as a result of tenants relocating into new buildings. Several of these existing properties will require significant upgrades to stay competitive with a number of Class A towers expected to come online in the near future.
The Downtown Toronto market also saw strong leasing activity through the summer, with 547,356 square feet of positive net absorption and a 0.4% quarter-over-quarter decrease in overall vacancy to 5.0%. Roughly half of the positive absorption can be attributed to the recently completed QRC West development, which came online 96% leased.
Full details are available from CBRE Market Watch.
