REITS Respond Differently to Demand for Office Space
Earlier this year, the demand for office space in the Canadian market was on the rise particularly in the major city centers. Local REITs have seen it and have responded…differently.
Allied Properties REIT and Dream Office REIT are the two main REIT companies in Canada whose portfolios primarily contain office spaces for rent or lease. In the nine months ending September 30, 2014, Allied Properties REIT had invested $210 million in acquisitions of seven properties with 568,000 square feet of GLA (gross leasable area) and 553 parking spaces, and another $15 million in 460 King Street West in Toronto, all of which are now part of its rental portfolio. In that same period, Dream Office REIT sold eight properties for a total of $71.5 million and invested $20 million in building improvements aimed at attracting and retaining tenants to the remainder of their portfolio.
Leasing activity for both REITS remain strong. Allied Properties REIT leased over 831,000 square feet of office space in nine months, plus an additional 59,500 square feet at 250 Front Street. As of last week, it was still negotiating five new leases which, if completed, will increase its GLA by 70,000 square feet. Dream Office REIT has already leased 810,000 square feet of office space to date with 219,000 square feet being in the Greater Toronto area. Portfolio occupancy for both REITS remain strong at 93% for Dream REIT and 91.6% for Allied Properties REIT.
What does this mean for business owners? In short, if you are thinking of renting or leasing office space in Canada, act quickly but responsibly. Available office space is out there but there may be slim pickings when finding the ones that would be ideal for your organization.
Emory, Michael R., Allied Properties, “Allied Properties Real Estate Investment Trust Announces Third-Quarter Results with Continuing Broad-Based Momentum”, Market Wired
Dream Office REIT, “DREAM OFFICE REIT REPORTS THIRD QUARTER 2014 RESULTS”, dream.ca/office