Emerging Toronto Business Hubs Place High Value on Rapid Transit

  • Office clusters near rapid transit stations commanding higher rents and experiencing lower vacancies
  • Subway extensions triggering significant development opportunities around York University
  • Vaughan quickly emerging as the next “North Yonge”
New research from Jones Lang LaSalle (JLL) reveals that office tenants in Toronto’s emerging business hubs are willing to pay a substantial premium for the convenience of rapid transit access.
 
The firm’s inaugural Transit Report examined the impact of transit access on the commercial real estate market. The report found that buildings within 500 metres of subway stations in the Greater Toronto Area’s midtown and selected suburban markets have vacancy rates less than half of those outside the radius and command average net rental rates 38 per cent higher.
 
“Similar to the downtown core, tenants in Toronto’s emerging suburban business hubs are placing considerable value on the proximity to rapid transit,” said Eamonn Murphy, Managing Director, Jones Lang LaSalle Canada. “Property owners are benefitting from the expansion of rapid transit throughout the GTA and with numerous transit projects underway, we anticipate strong rental markets to continue in those areas.”
 
North Yonge is the largest office market in the study and one of Toronto’s fastest growing mixed-use neighbourhoods. The direct vacancy rate in the area is 4.3 per cent for buildings near transit facilities compared to 9.8 per cent for buildings located off transit. The average North Yonge office rental rate near rapid transit commands a 17 per cent premium. An area once seen as little more than a small suburban market with limited access has been transformed into an urban centre with all the benefits of city life.
 
The report also identifies the significant impact that the Yonge-University-Spadina line extension is expected to have on the areas around York University and Vaughan. As a result of the extension, there has been an abundance of mixed-use development proposals, including a recent allocation of 140 acres by York University for mixed-use development. Among this are 8 million square feet of new mixed used space that will be anchored by the new Steeles West Subway Station in the northwest corner of the York campus.
 
Similarly, the report finds that the City of Vaughan is poised for rapid growth and has recently dedicated 442 acres for the development of the Vaughan Metropolitan Centre (VMC), which is expected to include 25,000 residents and 11,000 jobs by 2031.
 
“Vaughan may be the next North Yonge and regional planners have done a good job ensuring that the community will be self-sustaining with important amenities nearby,” continued Murphy. “Many developers have recognized this and commercial construction investment was up 68.8 per cent in 2012 as a result. With many prominent developers holding significant land parcels within the designated VMC area, we expect Vaughan’s growth to continue.”
 
For specific information on how rapid transit expansion is impacting the Greater Toronto Area’s commercial real estate needs, please download the JLL Transit Report.
 

on August 28, 2013