It’s no secret that condos have overtaken Toronto’s cityscape and real estate market. For two decades, the city’s skyline has been dominated by cranes building new condo towers that reflect the growing demand to live within Canada’s most populous city. Historically, most of these towers have been designated for residential use, but that trend is shifting, as many developers are building mixed-use projects that will heavily feature office space that investors and business owners can purchase.
Jim Burtnick is a Certified International Property Specialist and Vice President in charge of sales for Sotheby’s International Realty Canada, and he thinks that city planners are tapping into something really exciting here.
By mandating that condo developers devote a certain portion of their primarily residential condo tower project for office condos (usually this occurs as part of the negotiations related to zoning variances, additional height, etc), what the City is doing is ensuring that these areas where the developments are occurring are not simply "residential zones" that are hollowed out during the work days. Now with office condos and retail aspects too, you get an area that has a 24-hour life cycle.
Welcome to the rise of Toronto’s office condos.
Theory Condos Pivotal for Toronto’s Future
Parallax Development Corporation will be on the forefront of this growing trend with their Theory Condos on College project, which will be built on the southeast corner of College St. and St.George St. Located in Toronto’s exciting Discovery District, Theory Condos will be set amongst amazing public transit and local amenities that will have workers fall in love with their office space.
Theory Condos are only a 5-minute walk away from Queen’s Park subway station, making them accessible from across the entire GTA. This makes it easy for anyone to reach work on time, which is an important factor when attracting the city’s most qualified and sought after employees. If that weren’t enough, workers will also have direct access to the 506 streetcar that travels along College, Carlton, and Gerrard.
These offices also boast a wealth of local amenities that surround the area. In addition to its cafes, bars, and restaurants, Theory Condos are also handy to some of the most recognizable cultural institutions in the city. The Art Gallery of Ontario, Ed Mirvish Theatre, Royal Ontario Museum, and Yonge-Dundas Square are all less than a 20-minute walk away, perfect for after-work plans.
Theory Condos will be a mixed-use development, also featuring residential and commercial retail units. Its 29 storey tower will rise out of a 4 storey podium, and it will feature an impressive list of amenities that include a Fitness Centre equipped with free weights and cardio equipment. Are yoga and pilates more your thing? Then you’ll love the Yoga Studio that faces out toward Toronto’s west end. It will also house an innovative study area with high-speed Wi-Fi. The ground level will have a Starbucks, which is the lifeblood for many young professionals.
The office space prices start at $775 per sq.ft. according to Toronto's MLS Listing.
Office Condos Are Finally Coming To The Downtown Core
Burtnick is particularly excited about Theory Condos because of its location.
Imagine that you are a tech startup looking for talent. Here you are right next to U of T with all of its constant supply of new, fresh and ambitious talent literally at your doorstep! It doesn't get better for a recruitment pool and the younger generation do not want to commute between home and work any longer as their parents did. This is the new way of living.
In fact, tech-industry is one of the most significant proponents of building more office condominium developments. A recent report from the CBRE Group shows that Toronto’s growing tech-sector accounts for 20 per cent of pre-leased space in the city. The same report also shows the demand for office condos by revealing a rock bottom 2.7 per cent vacancy rate for the city’s office space.
It’s not just tech companies who see the boon of owning office condos. Prominent real estate developers and investors are putting their weight behind this trend by purchasing office condos. Notable examples are Tricon Capital, who purchased 15,329 square feet of space at 7 St. Thomas Street for $13,315,900, which breaks down to $869 per square foot. The Daniels Corporation also bought 24,686 square feet at 130 Queens Quay for $13,858,737, which breaks down to only $561 per square foot.
The Benefits of Owning an Office Condo
In many ways, the advantages of owning office space mirror the advantages of owning a home. According to Burtnick,
These small businesses are waking up to the fact that they can actually build equity during the lifespan of their business and have an additional asset (besides the business itself) to sell when they depart from the business. That is, instead of paying rent to a major landlord like Brookfield for the next 20, 30, or 40 years, they can build equity by purchasing an office condo plus control their occupancy cost instead of being at the whim of landlord's and the marketplace when they go to renew their lease. It is a no-brainer!
Essentially, small businesses will be able to count the tangible real estate asset of owning the office condo in addition to their intellectual property and profit earning mechanisms. Another attractive benefit to owning your office condo is that it gives you direct control over your space. When business owners rent their office space, there are plenty of hurdles to overcome. One example is renewing the lease because the business owner is at the whim of the landlord and market values, and they could be forced to pay much more in rent, or even relocate if they can’t afford the increased expense. But if they own the space, the growing market value of the office will increase the business’ value.
Owning an office condo also puts the business owner in control of the layout and aesthetic of the space. Landlords can put rules and limitations on the space, making it difficult to optimize your business and profitability. It can make it difficult to create a design that truly reflects the identity of your brand, which is integral to impressing clients.
It’s not that office tenants aren’t interested in buying their own office space. Senior Vice President at Lennard Commercial Realty Dean Macaskill explains that many people begin their office search by looking for property to buy, but they often end up leasing because locations are too poor, and supply is almost non-existent. There’s also the matter of cost. Freehold office space typically exceeds $1,000 per square foot, whereas office condos cost much less than that. One must also consider the cost of renovations due to the buildings usually being 30 years or older.
This is why Theory Condos and the influx of other mixed-use buildings that feature office condos are so integral to the city’s future.
Investing In Office Condos
Office condominiums are also a great opportunity for real estate investors who want to diversify their portfolio. With long term leases, more dependable payments, and newer markets, investors could significantly improve their holdings by getting involved with office condos. Theory Condos are in good hands because they’re being built by Parallax Development Corporation, who have been building and developing properties in the region since 1981.
They started their operation by focusing on developing retail shopping plazas but expanded their domain to constructing a wide variety of different projects, including front retail, and mid-rise and high-rise residential and mixed-use properties. Through all of this, creating value has been at the core of what they do, so investors and business owners can trust that their investment will see meaningful equitable growth in the future.
Theory Condos on College are just the beginning of what will surely become a persistent trend in Toronto’s real estate market. Burtnick hopes,
the City will continue to encourage office-condos being a portion of new residential towers. We are losing employment land all over this city, and here is a way to provide more, especially for the fastest growing segment of the business economy — self-employed and small businesses.
Like he said before, office condos being the future of Toronto real estate is a no-brainer!