Bogtrotter
Senior Member
I well remember that lengthy lull. Simcoe Place was only prominent highrise going up- how exciting it was to see that skyline gap between the CN tower and the FD getting filled. It even had a column in the G&M devoted to it.
Toronto The HUB | 258.46m | 59s | Oxford Properties | Rogers Stirk Harbour
- Thread starter Michael62
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I well remember that lengthy lull. Simcoe Place was only prominent highrise going up- how exciting it was to see that skyline gap between the CN tower and the FD getting filled. It even had a column in the G&M devoted to it.
maestro
Senior Member
Yeah, Simcoe Place and 1 Adelaide East got started just before the shit hit the fan. Simcoe Place sat empty for years until some public entity got a sweatheart deal. Anyways, one of the driving forces behind the office space boom is the same as it was back then. The other has proven itself to be as cyclical.
AlvinofDiaspar
Moderator
Not likely given at the end of the day this is a conventional central core office tower but I would like that, of course.
AoD
AlvinofDiaspar
Moderator
travis3000
Active Member
You guys also have to remember that demographic trends weren't nearly as pronounced back in the 90's (everyone is moving to the core now and has been for the past 10 years) , the city wasn't nearly as mature back in the 90's (the downtown has way more talent now which is driving companies to invest). We are in a totally different environment, Toronto is becoming a big global city. So I think the negativity here is a bit unfounded to suggest we are heading back to the times of commercial construction cobwebs and straw blowing down Yonge St. My guess is we will continue to see tight commercial vacancy rates (under 7%) for the next decade (barring any massive global depression).
maestro
Senior Member
We are just larger and in a prolonged real estate boom because of greater outside influences. Things are different but, it's short sighted to say things are totally different from the late 1980s or the late 1990s/early 2000s office boom. Vacancy rates in 2000 were as low as 4% too. The only reason traditional towers didn't rise in the core is because 12 million square feet was created through conversions and additions in and around downtown. A few years later, vacancy was in the double digits.
I don't know the outcome. We could very well be at 4% in 10 years with another dozen major towers built by famed architects. The "This is Toronto" boosterism and that the prolonged condo boom isn't based on the same real estate speculation as past condo booms isn't very scientific.
I don't know the outcome. We could very well be at 4% in 10 years with another dozen major towers built by famed architects. The "This is Toronto" boosterism and that the prolonged condo boom isn't based on the same real estate speculation as past condo booms isn't very scientific.
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travis3000
Active Member
Yep and yet 2007/2008 onwards has seen an explosion in commercial space (in the form of NEW towers)
-PWC Tower
-Telus House
-RBC Waterpark Place
-Sun Life Financial Tower
-RBC Centre
-EY Tower
-Deloitte Tower
-KPMG Tower
with CIBC Square, The Well, and 16 York under construction....
It all totals over 12 million square feet of new space yet the vacancy rates are at all time lows? It means the economy is doing well, businesses want to be in the core. Is that going to change? It may, but I think it wont anytime soon.
innsertnamehere
Superstar
The 1990's and 2000's complete lack of office construction was a couple of factors from my understanding..
1. a relatively weak economy.
2. A huge shift to suburban growth. From about 1990-2005 or so there was almost no growth in Toronto itself. The GTA continued its standard growth rate, but about 90% of it occurred in the suburbs. Today that has dropped to about 60%.
3. Millions of cheap square feet opening in the "two Kings" in the form of converted warehouse spaces (now considered extremely desirable "brick and beam" spaces). all that 10% of GTA growth was easily accomodated in this space, meaning there was simply no market for new construction office. The Brick and Beam conversions only really ran out of buildings to convert in the last 5 years or so, that is why you are starting to see new construction buildings outside of the immediate downtown core today. Think Queen Richmond Centre, Globe and Mail building, etc. It is this previously seemingly endless supply running out that has put a lot of pressure on downtown office space today - and why there is a big push to get a lot more office product built. These spaces are what really drove the downtown market for 15 years.
1. a relatively weak economy.
2. A huge shift to suburban growth. From about 1990-2005 or so there was almost no growth in Toronto itself. The GTA continued its standard growth rate, but about 90% of it occurred in the suburbs. Today that has dropped to about 60%.
3. Millions of cheap square feet opening in the "two Kings" in the form of converted warehouse spaces (now considered extremely desirable "brick and beam" spaces). all that 10% of GTA growth was easily accomodated in this space, meaning there was simply no market for new construction office. The Brick and Beam conversions only really ran out of buildings to convert in the last 5 years or so, that is why you are starting to see new construction buildings outside of the immediate downtown core today. Think Queen Richmond Centre, Globe and Mail building, etc. It is this previously seemingly endless supply running out that has put a lot of pressure on downtown office space today - and why there is a big push to get a lot more office product built. These spaces are what really drove the downtown market for 15 years.
Contra
Senior Member
If it's like the dark glass on Leadenhall (which I think it is) it will look stunning. Manages to be completely clear in sunlight but a nice solid presence in greyer lighting (something Toronto and London know much about).
4. A significant amount of office space built in the 1980's just a we hit a major recession. Brookfield Place, Scotia Tower and many more were built around the same time in a city smaller than today. We could easily see a similar collapse in new builds if something happened to the economy. "It's different this time" is a foolish way to look at things like this. Good times are generally followed by bad ones. The only thing we don't know is the timing.
Bogtrotter
Senior Member
Gone but not forgotten:
(Tibor Kolley/The Globe and Mail)
Fingers crossed The Hub and The Well get built before the next 'lull'.
(Tibor Kolley/The Globe and Mail)
Fingers crossed The Hub and The Well get built before the next 'lull'.
maestro
Senior Member
What's your point? How is that any different than the late 1990s/ early 2000s? Millions upon millions of vacancy space was back filled and 10 to 12 million square feet of new space was cobbled out of underutilized, derelict buildings and, after all that, the vacancy rate still hovered at record lows. The only difference between now and then is that we ran out of older buildings to convert. We definitely would have seen new towers built back then too if the shit hit the fan a year later than it did.
The economy appears strong but, it definitely isn't as resilient as it appears. Same with the housing market in respects to people wanting to live downtown.
AHK
Senior Member
My understanding is that when Simcoe Place was being proposed, due to overall market conditions at the time, it was not going to go forward as a spec building, but needed a pre-leasing commitment - a commitment that was provided by WSIB, as a result of the tender process ran by the WSIB when the end of their lease was coming up at 2 Bloor East. So in summary - Simcoe Place was not a spec building, but got the go ahead for construction when the leasing commitment for a sizeable tenant, WSIB came into place. In a sense, that Simcoe Place went ahead 'only' because of WSIB may be a bit out of context - Simcoe Place went ahead because the necessary pre-leasing commitment was achieved, which turned out to be due to the WSIB.
Further to the comments comparing the general office market situation in downtown Toronto from the 1990's slump to today - obviously, the fundamental cyclical nature of the economy and the commercial office space market remains, however much has changed over the past twenty years. The relative rebalancing of commercial office taxation rates between downtown and the suburbs has helped, as has the overall secular trend towards denser urbanization. But I feel Toronto is in a bit of a special situation. The economy here has become much more diversified, with more and stronger support pillars than ever before:
- huge education centre - not just the public school systems, but private schools, along with an increasingly large college and university sector, in part driven by the ongoing growth in international students
- large health care and associated medical research focus
- ongoing growth in Toronto's role as a global financial centre, with the associated impact on its supporting partners' Toronto operations - the legal, accounting, consulting, and technology firms working with the banks, insurance companies, investment firms, etc.
- growth of the entertainment industries - filming, post-production, animation, etc,
- emergence of Toronto as a technology hub, and now into the emerging field of Artificial Intelligence
So my overall theme is - yes, a cyclical downturn is going to come at some point, but relative to other cities, my thought is that Toronto may not be impacted to the same extent, and that coming out the other end, Toronto's momentum, relative to many other cities, should continue to show further gains.
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travis3000
Active Member
cd concept
Senior Member
With the green policies put in place today in the Golden Horseshoe and in other major North American cities. Show that the downtown area are in vogue. And that most of the new generation wants to live where it's happening. This is one good reason to say why developers are gambling on building office towers that 50 storeys and up! Even an unhealthy city like Detroit is a good example of a downtown core thats rejuvenating it self. And now there's talks in building a mix use building thats over 800 ft high on the Hudson site ! Not to mention the other healthy cores like New York City etc !