In The Ebb And Flow Of Toronto’s Office Sector, Financial Firms Anchor Down While Tech Tenants Set Sail
In The Ebb And Flow Of Toronto’s Office Sector, Financial Firms Anchor Down While Tech Tenants Set Sail
Comparing office utilization rates for specific North American cities shows that the occupier makeup of certain cities has had a material impact following COVID-19. Cities that rely heavily on tech and creative companies to fill offices, such as San Francisco, have lagged behind those that rely more heavily on financial firms, such as New York.
One of the advantages enjoyed by Toronto’s economy in recent years has been its relatively well-hedged economic diversity. Toronto is one of the top five cities in North America for both financial services and tech.
However, these services have tended to cluster within specific downtown submarkets. The clustering of financial and tech services firms within specific submarkets reveals a material divergence in general office performance metrics among the individual submarkets that comprise Toronto’s downtown core. Specifically, since the pandemic and the emergence of the work-from-home economy over the last few years, office availability rates have fluctuated based on location.
For example, the office availability rate in the Downtown West submarket, which houses many of Toronto’s tech firms, has steadily increased. In contrast, the Downtown South submarket has shown more resilience. This area of downtown Toronto, which is bisected by Bay Street, benefits from the steady demand for office space generated by financial services occupiers that congregate in this area.
It also benefits from Union Station and access points to the Gardiner Expressway, which offer comparatively faster commutes.
This disparity in office availability rates by submarket will likely hold in coming years, as overall office utilization remains lower today than before the pandemic. The rate at which it will recover is an open question that only time will tell.
One thing that is certain is that office utilization rates will not increase equally everywhere in an expected recovery. As demonstrated in the example of the two downtown submarkets, COVID’s impact on the office market is like glacial erosion. Its application is uneven, with some areas experiencing deposits of demand while others see it stripped away.
Source CoStar. Click here for the full story.
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