TOP STORIES JOBS CITIES EVENTS VIDEOS ABOUT National News > Toronto Real Estate News 0 > SIGN UP LOG IN Contact Us News Toronto State of Marke OUTLOOK 2016: WHAT TORONTO CRE PROS WILL BE WATCHING FOR NEXT YEAR Dec 22, 2015 Ryan Starr, Bisnow Tor/Van Facebook Twitter LinkedIn Email Print 'Tis the season for reflection and peering into crystal balls (or are those snow globes? ). Bisnow asked Toronto commercial real estate experts about the year that was and what they ll be tracking in the New Year.
Major New Office Developments Roughly 3.5M SF of office is coming on line between now and 2017, and Avison Young principal and research chief Bill Argeropoulos tells us he ll be monitoring a number of major downtown developments. He took this pic outside Union Station because it's near where Ivanhoé Cambridge will launch Phase 1 of Bay Park Centre, a JV with Hines with two office towers, retail and a new GO Transit bus terminal. It will redefine the skyline, and bookend redevelopment of Union Station, says Bill, noting Avison Young s HQ (18 York), the Delta Toronto and Bremner Tower constitute the node s other end.
With major projects like Oxford Properties Group's EY Tower well underway, and Brookfield's Bay Adelaide East now complete, TO will see the launch of The Well, the Globe and Mail site redevelopment by Allied Properties REIT, RioCan REIT and Diamond Corp that Bill says speaks to the expansion of our market outside the financial core (as does First Gulf s pioneering of downtown s eastern flank). Nearly 75% of new office supply is spoken for, and Bill sees steady leasing velocity in 2016 (for Vaughan and GTA West especially). But flight to quality is forcing old-stock landlords to cut better deals. Tenant retention is paramount as we head into the next development phase. Retail Keeps Rolling
Ontario was a top retail performer in 2015, with 4.2% growth in year-over-year sales, second only to BC. Colliers International senior consultant/retail specialist David Bell says the low loonie is a factor, boosting exports while keeping shoppers home (a boon for Ivanhoe Cambridgé s The Outlet Collection at Niagara and Toronto Premium Outlets (a Simon Property Group/Calloway REIT JV in Halton Hills). Strong job growth will continue to fuel retail in 2016, particularly in luxury nodes and at premium shopping centres like CF Toronto Eaton Centre, CF Sherway Gardens and Square One Shopping Centre, which are seeing significant reinvestment by owners.
Two of 2016's biggest retail stories will be the highly anticipated arrival of Nordstrom and Saks Fifth Avenue at CF Eaton Centre (billed above) and at Sherway Gardens. Nordstrom launched its Vancouver location (where David snapped his selfie) earlier this year. In the wake of Target s disastrous misadventure north of the border, which ended abruptly this year, David says US retailers now recognize it s a much lower risk, slamdunk option to secure space at premium properties first, then consider next steps, instead of trying to roll out a Walmart-style expansion circa 1994 and cover the entire country. Industrial Continues To Sizzle
GTA industrial killed it this year, with vacancy rates hitting a new low (1.9%), 3M SF coming to market YTD, and nearly 2.6M SF absorbed in Q3 alone, according to CBRE. E- commerce and big-box retailers are driving demand for large-bay industrial space (Forever21 leased 380k SF at 2450 Hogan Dr in Mississauga in Q3, for example). And CBRE s Toronto managing director Werner Dietl tells us that GTA industrial is poised for another great year in 2016, as 8.7M SF is under development, much of it spec, like Prologis three-building, 486k SF distribution facility on Lawson Road in Milton (below).
E-commerce is reshaping size needs for industrial facilities, too, with some distribution centres being built with ceiling heights up to 40 feet clear, helping maximize the value of increasingly more expensive sites. GTA West, among TO's more bustling nodes, has seen a 13.4% increase in the past year for well-located large tracts of industrial land, CBRE says. Werner expects the trend toward industrial decoupling will continue to impact demand in 2016, as companies seek to separate uses that used to be combined, moving offices to more traditional suburban nodes. Momentum in Multifamily
TO multifamily continues to generate extremely strong investor demand, Cushman & Wakefield senior managing director Brian Kriter tells us, noting his team appraised over $1B in that segment alone in Q3. It s an investment class that will continue to be in vogue in 2016. While major multifamily projects tend to attract institutional investors, Brian says the market has been seeing increased interest from "value-add investors" private players in search of higher returns who are deploying significant capital in secondary or tertiary markets, as seen in this year s major portfolio sale in Windsor.
Toronto will see purpose-built rental projects gather steam in 2016. Urbanation reports that 6,500 such units were under construction in Q3, the highest level the city s seen in decades. Purpose-built buildings to watch include Rockport Group s Montgomery Square (above); 66 Isabella; and Daniels Erin Mills, with a rental building that s a JV with Sun Life Financial. This new rental supply is being well received, says Avison Young s Bill Argeropoulos, given that much of TO's existing stock is half a century old. We re seeing a lot of pension fund money moving into that arena now." See Also: Detached Homes See Significant Price Leap This Year Related Topics: Colliers, Avison Young, Target Canada, Oxford Properties Group, Union Station, Prologis, Bill Argeropoulos, Bremner Tower, Simon Property Group, RioCan REIT, Allied Properties REIT, Ivanhoé Cambridge, Sun Life Financial, First Gulf, GO Transit, Saks Fifth Avenue, Nordstrom, Milton, David Bell, Bay Adelaide East, EY Tower, purpose-built rental apartments, Calloway REIT, Rockport Group, Montgomery Square, Toronto Premium Outlets, Diamond Corp, The Well, Delta Toronto, Brian Kriter, Vaughan, Square One Shopping Centre, purpose-built rental, Cushman & Wakefield, Forever21, Bay Park Centre, CF Toronto Eaton Centre, Werner Dietl, CF Sherway Gardens, The Outlet Collection at Niagara, 66 Isabella, Daniels Erin Mills
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