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1. MARKET REPORT
TENANT’S
GUIDE
TORONTO
Experience
Integrated Services
FOURTH
QUARTER
2013
Sector Insight
Michael Lomax
Tenants are increasingly recognizing that their corporate premises
relocation or renovation. Accurate industry knowledge, design and
may not be designed to support their changing needs. Once this
engineering solutions, budgeting and scheduling and overall
becomes apparent, decision makers naturally want to correct the
corporate impact must be delineated with recommended
situation as soon as possible in order to increase efficiency and
approaches to accomplish a successful transition. Cresa’s
effectiveness. Real estate decisions are based on numerous
experienced Integrated Service providers sit on the tenant’s side as
financial and strategic concerns that often require considerable
advisors and provide the necessary guidance.
evaluation and a thorough and detailed process for implementation.
As such, the path to any successful solution includes a professional
Advice
approach with experienced real estate consultants.
Individual stakeholders can be self-serving; this is problematic, as
The overall critical path to completion of leaseholds is best serviced
the overall corporate expectation must encompass everyone’s
by those who execute these practices every day. Our Project
needs (while still supporting the overall mission). Cresa’s Integrated
Management team often hears of tenants being advised that the
Service platform establishes stakeholder requirements, develops a
traditional design-bid-build process is the least complicated and
sound strategy, sets milestones and defines fiscal restraints right
most effective; this may in fact be the case, if the client’s core
from project kick-off, regardless of a decision to move, stay or alter
business is project management. However, if the core business is
the premises. Strong leadership and a single point of contact
unrelated, nothing could be further from the truth. Clients need to
throughout the process allows for client confidence and trust,
be empowered with knowledge and expertise in order to make the
establishing a relationship that ensures that Cresa will deliver on its
best possible business decisions for each issue along the path to
On September 24th, 10 members
of the Cresa Toronto team rode
stationary bikes and raised funds
for
the
Juvenile
Diabetes
Research Foundation. The event
was a great success, and our
team raised $2,756, contributing
to the almost $200,000 raised
overall. Many thanks to our
donors who helped us achieve or
fundraising goals, and who make
research and advocacy for
Juvenile Diabetes possible.
mandate and achieve the client’s goals.
Discipline
LOCATION
Pallett Valo LLP
77 City Centre Drive
Mississauga, Ontario
23,597 SF
Overview
Pallett Valo LLP (“PV”) is the largest and one of the most
respected law firms in Peel Region. The firm had been operating
racking. Low odour and low VOC adhesives and paint products
out of 90 Burnhamthorpe Road West for 22 years, but needed to
were specified to maintain a healthy office and construction
reconsider its space as an expansion had become necessary and
environment. Electrical design mandated zone sensors for
could not be supported. Cresa Toronto commenced its
consumption during occupancy only, and auto off when not
engagement with PV proactively in order to assist with its real
occupied. The design maximized natural light penetration into the
Tenant
estate strategy moving forward.
office, which traditionally had not been considered in Legal office
Transaction Management
design. In partnership with the landlord, the environmental
The Arthritis Society
393 University Avenue
PV was very clear in its desired image and end result: a space
systems set back during the evening and weekend hours for
that would display the professionalism a law firm requires, a
reduced utility consumption.
Canadian Investor
Protection Fund
100 King Street West
layout and design that would carry it through a long term lease
PV officially moved into its new premises earlier this year, and is
and respect for the environment through the use of responsible
Aura Minerals Inc.
155 University Avenue
now operating out of a state of the art office facility. The private
material selections. PV’s partners decided that remaining in
meeting areas and spacious boardrooms offer cutting edge audio
Mississauga City Centre in relative proximity to its original
visual capabilities, high performance acoustics and exceptional
premises was the best solution, as it would continue to provide
design, providing optimal use of space. Information Technology
community awareness, accessibility for clients and uncompromised
was modernized, and future possibilities are user ready and
amenities for staff. 77 City Centre Drive is an A class building with
provide flexible options. In order to accommodate this impressive
151 Front Street West
much potential for a professional and environmentally conscious
new layout while maintaining budget expectations, Cresa re-
image to be portrayed, and as such PV completed a transaction
purposed and restructured existing improvements. By utilizing
for space on the third floor.
said improvements, PV could afford to purchase ‘green’ materials
Design and Project Management
where necessary, enhancing the firm’s environmentally
The design exercise respected 'sustainability' throughout the
responsible culture. Cresa enabled the process seamlessly, and
process. Although not LEED certified, the product selections for all
consistently empowered PV to make the best possible business
finishes represent environmentally respected materials, sources of
decisions throughout. The project was completed with a
origin and installation methods. Attention was paid to the reuse of
commitment to cost control, on schedule and with the highest
existing wood doors, metal frames and existing metal computer
quality of attention and service.
Cresa Transactions
Size
19,551
Type
Expansion/
Renewal
6,400
Relocation
4,284
Relocation
20,696
Renewal
iGate Technologies
Canada Inc.
8,008
2425 Matheson Boulvard East
Relocation
11,344
Renewal
Constellation Homebuilder
Systems
9,000
1840 York Road, Baltimore
Relocation
Brenntag Canada Inc.
43 Jutland Road
Peer 1 Network
Wood Bull LLP
65 Queen Street West
Tetra Tech WEI Inc.
350 Bay Street
Voltari Canada Inc.
130 Spadina Avenue
4,297
4,342
3,458
Renewal
Relocation
Renewal
Prepared by Cresa Toronto
Cresa Toronto Inc., Brokerage
170 University Avenue, Suite 1100
Toronto, Ontario M5H 3B3
416.862.2666 www.cresa.com
contact: bvandermark@cresa.com

2. MARKET REPORT
TORONTONMARKET G U I D E
I FIRST QUARTER 2012T O
TENA T’S
TORON
FOURTH
QUARTER
2013
Overview
Major Transactions
Over the past quarter, the overall
GTA availability rate increased to
11.4%, up from 10.5% recorded at
the end of Q2 2013. Both the
Downtown and Suburban markets
contributed to this trend, with
increases of 7.6% to 8.9% and
13.7% to 14.1%, respectively.
During the same period, the
availability in the Financial Core
increased from 8.7% to the current
10.4%. Availability in A Class
buildings in the Financial Core
increased from 8.8% at the end of
Q2 2013 to the current 10.9%, while
the availability in B Class buildings
increased from 7.7% to 8.1%.
Tenant/Buyer
Size(SF)
Type
Samsung
125,000
Office
Lease
The Globe and Mail
125,000
Office
Lease
Instaclick
24,000
Office
Lease
Brenntag Canada Inc.
21,000
Office
Lease
The Arthritis Society
19,500
Office
Lease
Peer 1 Network
11,000
Office
Lease
8,000
Office
Lease
Despite the increases in availability,
gross rents are still increasing in the
majority of nodes. The average gross
rent in the GTA office market
recorded at the end of Q3 2013 equals $29.95 PSF, an increase from $29.86 PSF
recorded at the end of Q2 2013. The average gross rent in the Financial Core
also increased slightly to $44.26 PSF from $44.21 PSF, with average gross rent
among A Class spaces in the Financial Core increasing to $51.74 PSF from
$50.21 PSF. The average gross rent in the Suburban market has increased
slightly over the past quarter to $27.55 PSF from $27.36 PSF, as recorded at the
end of Q2 2013.
iGate Technologies
Lease/Sale
Availability Rate
Market Trends
•
The availability in the Suburban market increased for the fifth
consecutive quarter
•
The Financial Core has experienced increased quantity of direct and
sublet availability
Tenant’s Perspective
Average Rental Rates
Although gross rents have remained relatively steady since the beginning of
2010, we have witnessed significant increases in availability rates since Q3
2012 from 9.1% to 11.4%; these rates surpass the levels we saw in Q1 2010.
While supply has been increasing over this period, a smaller percentage of
total inventory is being occupied by tenants.
CBD
Class A Office
Class B Office
Q1 2013
$50.15
$41.39
Q2 2013
$50.21
$41.87
Q3 2013
$51.74
$42.12
Suburban
Class A Office
Class B Office
Q1 2013
$30.11
$25.06
Q2 2013
$30.24
$25.22
Q3 2013
$30.38
$25.61
This large increase in availability will serve as a resistance point for further
gross rent increases in the short term. Despite lofty landlord expectations,
the market conditions will continue to improve for tenants over the next 1224 months as new buildings come on stream and economic growth remains
tepid.
Prepared by Cresa Toronto
Cresa Toronto Inc., Brokerage
170 University Avenue, Suite 1100
Toronto, Ontario M5H 3B3
416.862.2666 www.cresa.com
contact: bvandermark@cresa.com

3. Toronto, Ontario
Te n a n t ’s G u i d e
North American Markets
Fourth Quarter 2013
Overview
Major Transactions
Over the past quarter, the overall GTA availability rate increased
to 11.7%, up from 11.3% recorded at the end of Q3 2013.
The Downtown market was the main contributor to this trend,
with increases from 9.0% to 10.1% while the Suburban market
remained relatively flat decreasing from 14.0% to 13.9%. During
the same period, the availability in the Financial Core increased
from 10.5% to the current 11.0%. Availability in A Class buildings
in the Financial Core increased from 10.9% at the end of Q3 2013
to the current 11.6%, while the availability in B Class buildings
decreased slightly from 8.1% to 7.9%.
Tenant/Buyer
Size
Bayer
134,558 Office
WorleyParsons
95,868 Office Lease
Morguard Corp.
Type
Lease/Sale
Lease
72,887
Office
Lease
Innomar Strategies Inc. 60,073
Office
Lease
Sentry Select
Office
Lease
46,615
United Church of Canada 44,500 Office
Lease
25,717 Office Lease
PLASP Child Care
24,771
Office
Lease
Maple Financial
The increase in availability has been met with a slight decrease in
gross rents for the GTA. The average gross rent in the GTA office
market recorded at the end of Q4 2013 equaled $29.68 PSF, a
decrease from $29.89 PSF recorded at the end of Q3 2013. The
average gross rent in the Financial Core increased slightly to
$44.73 PSF from $44.26 PSF, with average gross rent among A
Class spaces in the Financial Core increasing to $53.35 PSF from
$51.74 PSF. The average gross rent in the Suburban market has
remained relatively flat over the past quarter at $27.52 PSF from
$27.54 PSF, as recorded at the end of Q3 2013.
Ontario Motor Vehicle
11,989
Office
Lease
Par Canada ULC
11,115
Office
Lease
Vacancy Rate
Market Trends
• GTA experienced four quarters of negative absorption
• Plentiful options emerging for tenant selection
Tenant’s Perspective
Overall the GTA office market has hovered from the mid to high
$29.00 range over the past six quarters, bounded between $29.44
and $29.89. Although gross rental rates have been steady, Q4
2013 experienced the highest recorded year over year negative
absorption in 10 years at 1,002,574 SF, representing 0.6% of
supply, which has in turn led to the highest availability rate in 10
years. The overall negative absorption was echoed in the Financial
Core, which experienced a negative year over year absorption of
253,408 SF.
Supply continues to grow as 28 buildings with 7,084,489 SF are
expected to hit the GTA office market by Q2 2017. Of the 28 buildings, two are to be built in the Financial Core adding an additional
1,911,452 SF, which should increase the downward pressure on
gross rents if current absorption trends continue.
Average Rental Rates
CBD
Q2 2013
Q3 2013
Q4 2013
Class A Office
Class B Office
$50.21
$41.87
$51.74
$42.12
$53.35
$42.57
Suburban
Q2 2013
Q3 2013
Q4 2013
Class A Office
Class B Office
$30.24
$25.22
$30.38
$25.61
$30.54
$25.25
Prepared By Cresa Toronto
170 University Avenue, Suite 1100
Toronto, ON M5H 3B3, Canada
416.862.2666 | www.cresa.com