nowhere near as dire as the last recession of the early 1990s, a report by Colliers
International declared Tuesday.
In the Greater Toronto Area, office vacancy rates increased in four out of five
regions: downtown (from 3.5 per cent to 7.3 per cent), midtown (from 6.9 per cent to
8.3 per cent), GTA east (from 9.4 per cent to 10.9 per cent) and GTA west (from 11.8
per cent to 13.1 per cent).
Only the GTA north office market saw its vacany rate drop, from 8.5 per cent at the
close of 2000 to 8.4 per cent at year-end 2001.
"The economic turmoil that had shown increased signs of subsiding prior to Sept.
11 is now expected to continue for the first two quarters of 2002," the report said.
"Any improvements will be gradual and are not expected to translate into increased
demand for office space until the fourth quarter of 2002."
The city's industrial vacancy rate also climbed to 5.4 per cent, up from about four
per cent a year earlier. About 14.2 million square feet of new industrial space was
built in 2001, with GTA west accounting for 71 per cent of that total increase.
Colliers expects the industrial vacancy rate to rise to 5.8 per cent by the end of 2002
as 10 million square feet are set to be added to the city's supply in a continued
building boom this year.
Yet one Colliers analyst said Toronto's real estate sector has performed very well
compared to the recession of the early 1990s.
"Our user and developer community adjusted extremely well to the changes," said
Jim McIntosh, president of eastern Canada for Colliers.
"In the last recession, it was rampant building and aggressive speculation. This
time it was caution and readjustment. We were prepared for this one," McIntosh
said.
McIntosh said Toronto's market is coping well with the current economic downturn.
While an industrial vacancy rate of 5.4 per cent is a downgrade from 2000, it's still
better than the 15 per cent vacancy rates seen in the last recession, he said.
The reluctance to build speculative projects has positioned Toronto to come out of
this recession in good shape, McIntosh predicted.
"It won't be a case where we have to rebound. This time it'll be a slowdown
followed by actual (positive) growth."
Toronto's retail realty market performed well in 2001, with the expansion into the
city of such U.S. chains as Wal-Mart, Old Navy and Williams-Sonoma. However,
weak retail sales after Sept. 11 "have slowed U.S. expansion plans considerably,"
the Colliers study said.
