Development shifting to the suburbs as downtown deliveries complete
While increasingly fewer projects have commenced construction in recent years, some new office project starts are being seen in desirable suburban nodes.
In fact, over the last four quarters suburban projects have accounted for 80.0% of the new starts, whereas in 2018 they only accounted for 17.4% of total starts on a square footage basis. Canada’s suburban market have proven more stable in recent years.
Q1 saw the start of projects in Vancouver and Winnipeg, where the suburban vacancy rate has trended downward and is well below 10.0% in both markets.
Nearly 700,000 sq. ft. was delivered this quarter in Vancouver, Toronto and Montreal, the majority of which was located downtown. The remainder of the year is expected to see an additional 6.0 million sq. ft. of new supply, which would put 2023 above recent yearly deliveries. The delivery of these spaces is a long time coming, with the majority having commenced construction prior to the pandemic in 2018 – 2019.