Market Trends of Canada Co-Working Office Spaces Industry
Toronto Region is Providing Ample of Opportunities to Tech Giants and Promoting the Market Growth
A report from the business world says that the IT industry was responsible for a big chunk of office leasing during the pandemic.Toronto leads the way in North America for tech job development. According to the survey, which assesses the influence of the IT industry on office demand and rents in Canada's 30 largest tech regions, Toronto saw a 26% increase in job growth from 2019 to 2020. Over the previous five years, high-tech companies have dominated the rental of office space.
Not surprisingly, the most expensive places were Toronto and Vancouver, where a private office costs an average of USD 1,657 and USD 1,270 per month.Other markets that averaged USD 1,000 or more per month for a private office included Ottawa and the Waterloo region, representing USD 1,112 and USD 1,083 respectively.
Co-working office spaces operated by real estate operators occupy 3.1 million square feet of office space, or 1.8% of the region's total office stock. The bulk of the space, 2.3 million square feet, is downtown, in 147 locations out of a total of 216 flexible workspaces across the GTA. Regus/Spaces is Toronto's largest flexible operator, with a 1.3 million sq. ft. footprint across 56 locations, or 42% of the market by square footage. It plans to add 347,000 sq. ft. over the next two years.
With a vacancy rate of 8%, Toronto has the highest downtown Class A rates, at CAD 34.18 (USD 25.53) per sq. ft. More than 7.5 million square feet of new supply are still under development in the city, with about 600,000 square feet under construction in the suburbs. However, during Q4 2021, more than 1.3 million sq. ft. of downtown office space was absorbed, slightly exceeding by roughly 40,500 sq. ft. the amount of newly completed supply added to the market over the same period. Owing to the above points, Toronto is expected to dominate the Canada co-working office space market during the forecast period.
Rising Supply of Co-working Office Space across Urban and Sub-urban regions
Hybrid and remote work arrangements will become the norm in 2022, which is why the world's largest flexible workspace and office provider continues to grow. The Canadian co-working office market is dominated by two major players, IWG and WeWork, which represent more than half of the national inventory. There are hundreds of single-site operators across the country, however, which make up over one-third of the market. IWG (Flexible Workspace and Office Provider) opened nine Canadian sites in 2022 and is focusing on expansion in secondary, tertiary, and suburban markets in which it had no, or minimal, presence.
In Canada, the amount of new office space rose for the second year in a row in 2022, and it was expected to keep going up in 2023.In 2021, there will be a total of almost six million square feet of new supply in the downtown and suburban office real estate markets.
Five new spaces totaling 173,500 sq. ft. will launch throughout Canada as demand for co-working spaces grows due to improved labor flexibility. About 83% of businesses are implementing a flexible or hybrid working strategy for their employees, allowing people to work differently than they did before the pandemic. Spaces recently opened a 26,000-sq.-ft. Zibi Ottawa cross-provincial facility. It is part of the 34-acre Zibi mixed-use complex on Chaudière Island, which connects Ottawa and Gatineau, and is housed in a refurbished four-story former paper mill building at 4 Booth St.
