Toronto Dominion Bc

New towers leave empty space in iconic buildings

The soaring towers of Toronto’s financial district have long been symbols of big business in the city. But while the area’s newest buildings are in hot demand and commanding high rents, some of the most iconic buildings are falling short.

While Toronto’s overall downtown office vacancy is just around 5 per cent, availability in older Class AAA towers such as Commerce Court West, First Canadian Place and Toronto Dominion Centre is averaging close to 21 per cent, according to commercial real estate company Avison Young.

“We’ve never seen it that high in those towers,” said Robert Armstrong, managing director of leasing services for Avison Young in Toronto.

Some industry watchers wonder what it will take to fill Toronto’s most historic towers and how it will affect the city’s real estate market as a whole.

Tenants have moved to more modern towers – such as the RBC Dexia Centre at 155 Wellington Street West – for their lower operating costs and taxes, and for their Leadership in Energy and Environmental Design status, which is good for both bragging rights and energy savings, Mr. Armstrong said. As well, companies consolidating their operations might move into a new tower to merge multiple locations into one.

It’s not that tenants disliked the older towers, Mr. Armstrong said. “It’s more that technology and efficiency have been the key drivers to them saying, ‘We really can’t stay here any longer the way we are operating. Where can we go … to get ourselves to a better quality of life, with more efficient space? And oh, by the way, we can be in some of these LEED buildings, which is good for the environment and good for our corporate stance on sustainability?’”

To make their older buildings competitive, landlords have been embarking on large-scale renovations. One of the most aggressive is at First Canadian Place, built in 1975, with owner Brookfield Office Properties spending upward of $100-million. According to Brookfield, of the 9 per cent of First Canadian Place that is vacant, only 1.3 per cent is available for immediate tenant possession. The rest of the empty space is slated for renovation this year.

New towers leave empty space in iconic buildings | Roltek Blog

The soaring towers of Toronto’s financial district have long been symbols of big business in the city. But while the area’s newest buildings are in hot demand and commanding high rents, some of the most iconic buildings are falling short.

While Toronto’s overall downtown office vacancy is just around 5 per cent, availability in older Class AAA towers such as Commerce Court West, First Canadian Place and Toronto Dominion Centre is averaging close to 21 per cent, according to commercial real estate company Avison Young.

“We’ve never seen it that high in those towers,” said Robert Armstrong, managing director of leasing services for Avison Young in Toronto.

Some industry watchers wonder what it will take to fill Toronto’s most historic towers and how it will affect the city’s real estate market as a whole.

Tenants have moved to more modern towers – such as the RBC Dexia Centre at 155 Wellington Street West and the Telus Tower at 25 York Street– for their lower operating costs and taxes, and for their Leadership in Energy and Environmental Design status, which is good for both bragging rights and energy savings, Mr. Armstrong said. As well, companies consolidating their operations might move into a new tower to merge multiple locations into one.

It’s not that tenants disliked the older towers, Mr. Armstrong said. “It’s more that technology and efficiency have been the key drivers to them saying, ‘We really can’t stay here any longer the way we are operating. Where can we go … to get ourselves to a better quality of life, with more efficient space? And oh, by the way, we can be in some of these LEED buildings, which is good for the environment and good for our corporate stance on sustainability?’”

To make their older buildings competitive, landlords have been embarking on large-scale renovations. One of the most aggressive is at First Canadian Place, built in 1975, with owner Brookfield Office Properties spending upward of $100-million. According to Brookfield, of the 9 per cent of First Canadian Place that is vacant, only 1.3 per cent is available for immediate tenant possession. The rest of the empty space is slated for renovation this year.

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