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Significant rent increases expected over the next three years
Toronto, Ont. May 18 — Commercial real estate rents are expected to rise dramatically across Canada in the next few years, due to rising demand, an influx of highly-skilled workers and a shortage of new buildings, concludes a JLL Canada research report.
The research suggest Toronto will be the hottest commercial real estate market in the country. The upward increase in commercial real estate rents is expected to be nation-wide, with Vancouver, Montreal and even Calgary anticipated to see increases.
"I predict that rental rates of offices in the major markets will grow significantly over the next 3 years and anticipate that rents will increase as much as 50% in the most desirable well located trophy office buildings" says Brett Miller, Chief Executive Officer of JLL Canada. "In Toronto, valuations for trophy office product were on par with those seen in New York, Paris, London and Shanghai."
The JLL research report finds multiple factors influencing rental rates, including:
The current environment will stimulate rental growth, allowing Toronto office product to catch-up with other major U.S. cities, the report states. Similar conditions supporting upward trends in commercial real estate rents are present in Montreal, Vancouver — and even Calgary, whose rental rates have been under pressure after the drop in oil prices.
The JLL report finds: "Toronto's office CRE market is facing the lowest downtown office availability rate in ten years and has the lowest vacancy rate among major North American cities. After the completion of the EY Tower, downtown Toronto will see virtually no new office supply for the next three years. While several towers will be under construction, none will be deliverable until 2020, at the earliest.
U.S. President Trump's tighter immigration policies, combined with Canada's liberal stand on immigration, is attracting more highly skilled immigrants to Canada, which in turn creates more demand for office space.
"Canada recently introduced new visa measures that make it even easier for tech companies to recruit foreign talent," noted Miller. "With U.S. technology firms looking to further expand their presence in the country, Canada will see a flux of highly-skilled immigrants enter the workforce, creating more demand for office space."
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At the end of the first quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 78,000. As of March 31, 2017, LaSalle Investment Management had $58.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
Research Manager, Capital Markets
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