It is generally accepted in the Toronto real estate community that the Greater Toronto Area is divided into five office markets of which Downtown Toronto is the largest in terms of square feet of existing inventory. Toronto Downtown is the oldest concentration of commercial development in the Greater Toronto Area and consequently, there is an enormous range of types and sizes of structures that are currently used as office space for business, government, and not-for profit organizations.The total gross floor area of office space inventory in Downtown Toronto is about seventy million (80,000,000) square feet. Downtown Toronto together with the other, smaller urban market in this city, Midtown Toronto represent close to one half of all office space in the Greater Toronto Area. The typical size of a conventional office building in Downtown Toronto is 170,000 – 200,000 square feet and the average size of office tenant is estimated to be 6,500 square feet. Standard length of head lease term ranges from 5 years to 15 years.
Sub-Markets of Downtown Toronto
The Downtown Toronto office market is itself divided into six (6) sub-markets (called “office nodes”) each having their own distinct characteristics; they are: Financial Core, Downtown South, Downtown North, Downtown West, Downtown East and Liberty Village. Access to public transit, a rich arts and cultural community, walkability and concentration of population are consistent across all office nodes located within the Downtown Toronto Office Market.The Financial Core The Financial Core, sometimes referred to as the Central Business District (CBD) or Financial District, is surrounded by all of the other office nodes in Downtown Toronto. Toronto’s Financial Core has the greatest concentration of office building development in Canada and might be considered the main branch of the central nervous system of the Canadian economy due to the fact that decisions made in the boardrooms of office towers in the Toronto Downtown Core have long-reaching effects on markets in all other parts of the country and the rest of the World. Toronto’s Bank Towers are classified at AAA Class or Triple-A Class office space. All Toronto Bank Towers are located in the Financial Core and are contained in the following office complexes: - TD Centre, Cadillac Fairview - Commerce Court, GWL Realty Advisors - First Canadian Place, Brookfield - Royal Bank Plaza, Oxford - Brookfield Place, Oxford/Brookfield - Scotia Plaza, Dundee REIT Bay-Adelaide Centre might also be considered AAA Class due to its size, location, construction, landlord and tenants. The first tower erected at the Bay-Adelaide Centre is 333 Bay Street, which was developed, leased and is managed by Brookfield who are in the midst of developing the second tower on the property bordered by Temperance, Yonge, Adelaide and the first tower.
Oxford are also developing an office tower that will rival bank towers at 100 Adelaide Street West. This will add to Richmond-Adelaide Centre that is already one of the most prominent A Class locations in Toronto’s Financial District. Much of the rest of the Richmond-Adelaide Centre has just recently received a makeover including a new food court, additional retail and a complete retrofit of 111 Richmond Street West, Google’s Canadian head office.Toronto’s Financial Core is not only made up of Bank Towers. It has evolved mostly over the last hundred and fifty years leaving many examples of office building architecture for every era development and business cycle. There is a fantastic selection of categories and class of office all within steps of subway, streetcar, Go Train, VIA Trains, regional bus routes and extremely expensive parking. Downtown West and Downtown East Downtown West has a mature stock of office inventory including a large assortment of brick-and-beam structures but also a disbursement of A Class and B Class Buildings over a fairly large geographic area relative to other office nodes in Downtown Toronto. There are unique neighbourhoods within Downtown West that contribute to the colourful tapestry that makes Toronto such an interesting place to work and live; The Theater District (Entertainment District), The Fashion District, China Town, Little Italy are some of the most notable ones. Downtown East also has a high proportion of re-furbished, brick-and-beam structures that are now being used as office space. This might be considered the oldest area of Toronto. It is where the original Town of York is located approximately contained by Queen Street, the Don River, Lake Ontario (which at the time came as far north as Front Street), and Yonge Street. Fort York was located west of the Town of York. Brick-and-Beam Offices Older buildings in Downtown Toronto have been converted to office uses over the past few decades.
The greatest concentration of these antique buildings are found in Downtown West, Downtown East and Liberty Village. Many of these brick-and-beam structures were initially intended to be used for manufacturing, textiles, and warehouses; all were build-to-last and lent themselves to creating office environments that are inspiring, comfortable workspaces. Not so long ago brick-and-beam conversions were lower costs options given the value of obsolete industrial properties that were lacking in clear-height, highway transportation, shipping and power in many cases. Based on industrial value of the property, rents for the space converted to office would be relatively low compared to purpose-built office buildings elsewhere in Downtown Toronto. However, the character of brick-and-beam became more popular with some industries actually preferring the “creative” environments to conventional, modern office buildings. Allied REIT has a dominant position as a landlord in the market for brick-and-beam office space in Toronto in Downtown East, Downtown West and in Liberty Village. Though other real estate investors have entered the market and are gaining ground. Examples in Downtown East are Streetcar Properties that manage properties in the Distillery District (the original location of the Gooderham and Worts Whiskey Distillery) and surrounding areas and First Gulf who have re-purposed and added onto Toronto Sun Building on King Street East and secured Coca Cola Canada’s head office and the Globe and Mail as lead office tenants along with substantial retail uses that have entirely changed the complexion of the neighbourhood. Liberty Village On the west side of Downtown Toronto is Liberty Village, which is just the other side of the tunnel beneath the rail lines on the King Streetcar. Liberty Village has distinguished itself as a distinct office node in recently as so many of the properties in the area have been re-purposed as office. New residential condominiums and retail have made this part of Toronto a destination for knowledge workers and new and innovative businesses. There is a youthful energy about the place and all sorts of interesting, one-of-a-kind experiences that keep you coming back. Downtown North Downtown North was at the northern edge of the urban Toronto at the time of the construction of Toronto’s first subway after the World War II, which ran beneath Yonge Street to College up to from Front Street. At the time, subway construction northwards (from College to Eglinton) was less expensive to build mostly on the surface since there was relatively less land that was extensively developed that needed to be expropriated. T. Eaton Co. Limited, one of the greatest Canadian retail department stores at the turn of the century conceived of the greatest enclosed mall ever in the World. Construction began in the Great Depression around the same time as the construction of the Maple Leaf Gardens. This facility now includes a direct connection to the subway, offices and a massive ball room / entertaining facilities (originally intended for Lady Eaton herself to host parties). It was steps from where the Maple Leaf Gardens was to be constructed in art deco style. This was, of course at the southwest corner of Yonge Street and College and is now known as College Park, owned and operated by GWL Realty Advisors.
Since the construction of the original “Eaton’s Centre” in the 20’s, an even larger Eaton’s Centre was developed at the south end of Downtown North. Toronto Eaton’s Centre is on the west side of Yonge Street stretching an entire city block from Queen Street all the way to Dundas Street. At the north end of the Eaton’s Centre, Dundas Square has more recently been developed as a gathering place and outdoor cultural events centre. Downtown North has Ryerson University within its boundaries and is also adjacent to University of Toronto. Further south on University Avenue, the strip from College Street to Queen Street has been nicknamed “Hospital Ally” due to the fact that so many of Canada’s leading research and teaching hospitals are all located here including Toronto General, Mount Sinai, Princess Margaret and Sick Kids.
In the same area you can find the Ontario Courts, the Ontario Labour Board and the Law Society of Upper Canada that occupies Osgood Hall as well as space in neighbouring office buildings. Toronto City Hall is next door on the north side of Queen Street at Bay Street. Downtown South The greatest amount of new development: recently completed, ongoing and planned development in Downtown Toronto is located in Downtown South. Recently completed office buildings in Downtown South include: - 15 York Street (Maple Leaf Square), Cadillac Fairview- 18 York Street (PWC Tower – Southcore Financial Centre), GWL Realty Advisors - 25 York Street (Telus Tower), Menkes Developments - 25 Dockside Drive (Corus Quay), Morguardbr / Office buildings under construction and imminently planned for construction include: - 120 Bremner Boulevard (Bremner Tower – Southcore Financial Centre), GWL Realty Advisors - 88 Queen’s Quay West (RBC WaterPark Place), Oxford - 1 York Street, Menkesbr / In addition to this activity, there are a number of other projects that are in the pre-leasing phase and which would total over four million (4,000,000) square feet of new office development. Demand for office product in Downtown South has been largely driven by low vacancy rates and high rents in the Financial Core where substantial tracts of developable land is scarce. Development is being spurred by these market conditions to the immediate north coupled with a massive amount of residential condominium construction along the Toronto waterfront. Other economic factors that encouraged construction are: tax subsidies for head offices, the proximity to attractions (CN Tower, Rogers Centre, Air Canada Centre, Harbour Front) and relatively good access to transportation by car and by many forms of public transit (Union Station, Toronto Bus Terminal and the Toronto Island Airport). Union Station is being redeveloped to increase capacity and to become an attraction itself. From Union Station many of the recently constructed and upcoming office developments in Downtown South will be connected directly to the PATH enclosed pedestrian walkway system that runs beneath most of the Financial Core.