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Toronto Is Going Through Minimal Commercial Real Estate Vacancy: A Report

Ray Adams 2016-07-02 12:00:00

Toronto is the business epicentre of Canada. It is the hub of economic development, the convergence of corporate headquarters. Toronto's Bay Street is the financial engine of Canada.

Due to the fact that Toronto is Canada's ground zero for business, commercial real estate is both scant and highly valuable. The downtown vacancy rate for office space in the largest Canadian city is actually the lowest in all of North America, says a new report released Tuesday.

According to the latest look at the numbers at The Guelph Mercury, the vacancy rate for Toronto's commercial real estate market dipped to 4.9 percent in the second quarter of this year. This is down 40 basis points from 5.3 percent in the previous quarter.

The downtown vacancy rate doesn't look like it will be going up anytime soon. A declining vacancy rate in the downtown Toronto office market has been transpiring since 2013. One of the reasons is because there is a strong demand from tenants.

Just where is the demand coming from? Companies involved in the financial services and tech sectors. Since young professionals want to live and work in the downtown core, businesses are following that path and setting up shop. There is also a surging demand from foreign and domestic investors, which is adding to the overall values of the commercial real estate market.

Even with approximately four million square feet of new commercial office space entering the market over the last three years, there is still not enough supply to match the soaring demand.

Embarking Upon a Hot Toronto Market

With no signs of slowing down and many businesses still looking to make a dent in Canada's market, you may be interested in entering the hot commercial real estate market in Toronto, and, in particular, office space.

So, how can you lease or buy commercial real estate in a highly competitive and lucrative marketplace? Here are a few tips to consider as you buy or invest in office space:

Understand the Local Market

As the news highlighted, the vacancy rate for office space in the downtown core of North America's fourth-largest city is very low. This is the kind of information you need to peruse as you search for office space. By understanding the local market, you can gauge what exactly the economic conditions are like. And, obviously, with such a figure, the municipal economy is thriving.

Analyze the Benefits & Risks

Like any other type of investment or real estate arrangement, there are benefits and risks. Whether you're looking to invest in commercial real estate or you're leasing commercial property, it's always a good idea to weigh the benefits and risks. For instance, a benefit is that you may want to enter into a triple net lease, while a risk is possibly putting down an exorbitant down payment.

Hire Expert Help With Taxes

Akin to most metropolitan areas, the taxes are enormous. Toronto is often criticized for being the bastion of taxation. Everything from property taxes to businesses taxes, companies have to pay a lot of money in taxes to operate in the city. This is why you should hire financial experts to assist you in combing through the immense book of taxes and how you could potentially lower your rate.

Types of Commercial Properties

Depending on the business you're in, you should examine the various types of commercial properties in the marketplace. It all depends on what suits your needs. In Toronto, there are industrial properties, office spaces, retail outlets and business hubs that should all be considered.

What is the Use of this Property?

Lastly, you will need to conclude what the primary use of the property is. Is the property for selling goods and services? Is the commercial real estate for a customer service call centre? Is the office space for a startup? These are all questions that should be answered ahead of time. A commercial real estate agent can help you find the right space for the right business. Also check with a professional advisory to learn more insights about the market.

Ostensibly, all countries have their one economic centre. In the United States, it's New York, In Great Britain, it's London. In China, it's Beijing. In Canada, it's Toronto. So, of course, commercial as well as residential property values will be higher than elsewhere in the country. The commercial landscape is constantly changing so you must keep up with the updates.

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