Coworking Solutions – Sourcing Office Space for Toronto’s Tech Sector
In an age marked by rapid change, technology continues to dramatically dominant the way life is lived, work gets done and leisure unfolds.
Demand Exceeds Supply
Beyond its pervasive impact on life in general, Toronto’s flourishing tech sector is squeezing the existing supply of the city’s office space…with no immediate reprieve in sight.
As well, changing expectations find workers increasingly invested in achieving a more equitable work-life balance. Thus, they are seeking more…most often defined as a workplace that offers agility and flexibility…which notably has fueled the rise of the coworking sector.
Toronto currently has the distinction of being the tightest office property market in North America. As well, Canada’s booming tech sector is slated to continue as a major force for innovation and a reliable source for economic growth. CBRE’s Annual Tech Talent Scorecard reveals the city has claimed the #4 spot. As these trends overlap, commercial agents sourcing professional office space in Toronto suitable for technology firms will likely face challenges for the foreseeable future.
Numbers Tell the Tech Story…
Cushman & Wakefield’s Office MarketBeat, the quarterly summary of the commercial real estate that analyzes recent trends and market data in key cities, reports:
- The third quarter of 2018 in downtown Toronto saw the city retain its edge as largest and fastest growing office market in Canada.
- Downtown office availability in Toronto plummeted for a fifth consecutive quarter to yet another historic low of 2.3%.
- The technology sector is one of the main engines driving heightened demand with the tech scene stimulating more than 30% of the city’s office growth in the past year.
- With demand projected to remain steady in the short term, downtown Toronto will have limited office availability which may constrain growth and manifest in upward pressure on rental rates.
Also detailed in the MarketBeat summary, overall availability, which takes into account inventory in a city’s fringe, in major Canadian markets is now in a rock-bottom 1.5%, which has caused downtown average net rent to climb by 16.7% year-over-year.
Given Toronto’s tech scene’s volatile growth, this marked shortage of appropriate office space is the number one challenge facing commercial agents and their potential tech tenants. In 2017 in downtown Toronto, the tech sector alone accounted for more than a third of demand for office space. No mystery then that proactive and solutions-driven commercial real estate professionals recognize that coworking spaces are the ideal solution for their Toronto-based tech sector clients.
In 2017 in downtown Toronto, the tech sector alone accounted for more than a third of demand for office space.
Having evolved well beyond the original ‘start-up’ concept, coworking remains an excellent model for today’s next-generation of tech firms. Offering prime space in key locations complete with state-of-the-art technology, shared amenities and common spaces, measurable financial advantages and a degree of flexibility unavailable with traditional arrangements, coworking also contributes to the organic exchange of best practices and professional expertise.
Savvy commercial agents acknowledge coworking can be the best answer to a tech client’s dual desire for high-functioning office space that also serves as a platform for agile working solutions. Likewise, coworking landlords are now investing in partnering with commercial agents. Seeing mutual benefit for themselves and agents, they are cultivating ongoing relationships via formal commission programs and other incentives.