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nicetommy2002
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"Toronto office costs soar to rival N.Y."
From The Star:
As the Canadian dollar powers higher, companies may think twice about a Toronto address with a midtown-Manhattan office cost
Link to Article
Jun. 1, 2006. 01:00 AM
TONY WONG
BUSINESS REPORTER
Is Toronto on the verge of becoming the next Manhattan for pricey office space?
Toronto, for the first time, is within striking distance of New York when it comes to the cost of office space, thanks to the seemingly unstoppable rise in the Canadian dollar and a robust local economy.
Toronto leapt 16 places in the rankings of world occupancy costs — the most ever — to 32nd from 48th last year, according to a CB Richard Ellis survey released yesterday. That means companies looking to invest in Canada's largest city may think twice before setting up shop.
"It really was the perfect storm," Ray Wong, director of national research for CB Richard Ellis, said in an interview. "Not only is the vacancy rate declining significantly, but the Canadian dollar was also on a tear."
It now costs $50.47 (all figures are in U.S. dollars) per square foot a year to maintain an office in Toronto, up from $37.71 last July. Manhattan, the most expensive market in North America, now costs a mere 9 per cent more per square foot than Toronto at $55.15, according to the survey. A year ago, the difference was more than 40 per cent.
"Toronto has had a very healthy recovery, and we are seeing a shortage of large blocks of space, and good demand in prime locations," Wong said.
Last July, the Canadian dollar averaged 81 cents (U.S.), compared with almost 91 cents today. But a strong dollar doesn't entirely explain the huge increase. A strong economy has helped office vacancy rates in the downtown core plunge to 6.8 per cent at the end of March from 8.9 per cent at the same time last year.
The result is that building cranes atop office buildings are rivalling those for condominiums on the Toronto skyline.
Cadillac Fairview Corp. announced earlier this year that the city would get its first new tower in more than a decade. Brookfield Properties Corp. plans to start building the long dormant Bay-Adelaide Centre.
Wong said rents in the Toronto financial district have increased 10 to 15 per cent year over year. He expects another 5 to 10 per cent by year's end.
His company's survey looked at prime office space in cities around the world, tracking prices from July 2005 to the end of March 2006.
Since then, the Canadian dollar has increased even more compared with the greenback, and some analysts forecast the loonie will be even higher by this time next year, pushing Toronto further up the rankings.
"If we redid the ratings, Toronto would almost certainly be higher today," Wong said.
So, international companies looking to set up in Toronto will probably be taking a hard look at the bottom line.
"Companies will have to make a judgment call," said Wong. For businesses needing to establish a presence in the financial core, there will be no choice. "You will have to pay the premium." Others may be deterred and look elsewhere, Wong said.
Still, real estate costs are just one factor in a company's decision, he said. Access to skilled labour, quality of life and location are some of the other key elements.
Thanks to the oil and gas boom, Calgary, rather than Toronto, may be the first Canadian city to become more expensive than Manhattan, according to CB Richard Ellis.
Calgary, which boasts the lowest downtown vacancy rate of any Canadian city at 1.2 per cent, has leap-frogged 20 spots, to 35th place in the rankings with an occupancy cost of $46.83 per square foot. CB Richard Ellis forecasts Calgary will soon surpass Toronto as the most expensive city in Canada.
"With the expected continued growth in Calgary, in the short term Calgary rents could approach those of mid-town Manhattan," said the report.
"It's hard to even imagine a vacancy rate that low," said Wong.
London's West End, followed by Tokyo, remained the two most expensive places to do business in the world, according to the rankings.
From The Star:
As the Canadian dollar powers higher, companies may think twice about a Toronto address with a midtown-Manhattan office cost
Link to Article
Jun. 1, 2006. 01:00 AM
TONY WONG
BUSINESS REPORTER
Is Toronto on the verge of becoming the next Manhattan for pricey office space?
Toronto, for the first time, is within striking distance of New York when it comes to the cost of office space, thanks to the seemingly unstoppable rise in the Canadian dollar and a robust local economy.
Toronto leapt 16 places in the rankings of world occupancy costs — the most ever — to 32nd from 48th last year, according to a CB Richard Ellis survey released yesterday. That means companies looking to invest in Canada's largest city may think twice before setting up shop.
"It really was the perfect storm," Ray Wong, director of national research for CB Richard Ellis, said in an interview. "Not only is the vacancy rate declining significantly, but the Canadian dollar was also on a tear."
It now costs $50.47 (all figures are in U.S. dollars) per square foot a year to maintain an office in Toronto, up from $37.71 last July. Manhattan, the most expensive market in North America, now costs a mere 9 per cent more per square foot than Toronto at $55.15, according to the survey. A year ago, the difference was more than 40 per cent.
"Toronto has had a very healthy recovery, and we are seeing a shortage of large blocks of space, and good demand in prime locations," Wong said.
Last July, the Canadian dollar averaged 81 cents (U.S.), compared with almost 91 cents today. But a strong dollar doesn't entirely explain the huge increase. A strong economy has helped office vacancy rates in the downtown core plunge to 6.8 per cent at the end of March from 8.9 per cent at the same time last year.
The result is that building cranes atop office buildings are rivalling those for condominiums on the Toronto skyline.
Cadillac Fairview Corp. announced earlier this year that the city would get its first new tower in more than a decade. Brookfield Properties Corp. plans to start building the long dormant Bay-Adelaide Centre.
Wong said rents in the Toronto financial district have increased 10 to 15 per cent year over year. He expects another 5 to 10 per cent by year's end.
His company's survey looked at prime office space in cities around the world, tracking prices from July 2005 to the end of March 2006.
Since then, the Canadian dollar has increased even more compared with the greenback, and some analysts forecast the loonie will be even higher by this time next year, pushing Toronto further up the rankings.
"If we redid the ratings, Toronto would almost certainly be higher today," Wong said.
So, international companies looking to set up in Toronto will probably be taking a hard look at the bottom line.
"Companies will have to make a judgment call," said Wong. For businesses needing to establish a presence in the financial core, there will be no choice. "You will have to pay the premium." Others may be deterred and look elsewhere, Wong said.
Still, real estate costs are just one factor in a company's decision, he said. Access to skilled labour, quality of life and location are some of the other key elements.
Thanks to the oil and gas boom, Calgary, rather than Toronto, may be the first Canadian city to become more expensive than Manhattan, according to CB Richard Ellis.
Calgary, which boasts the lowest downtown vacancy rate of any Canadian city at 1.2 per cent, has leap-frogged 20 spots, to 35th place in the rankings with an occupancy cost of $46.83 per square foot. CB Richard Ellis forecasts Calgary will soon surpass Toronto as the most expensive city in Canada.
"With the expected continued growth in Calgary, in the short term Calgary rents could approach those of mid-town Manhattan," said the report.
"It's hard to even imagine a vacancy rate that low," said Wong.
London's West End, followed by Tokyo, remained the two most expensive places to do business in the world, according to the rankings.