Office Boom is Coming

Don Procter

July 2006

After a 15-year drought, downtown Toronto is poised for an office construction boom. A summer construction start has been confirmed for one Class A office building containing 1.2 million square feet and two super towers could be announced shortly, adding another 2 million square feet to the core.

That is good news for wall and ceiling contractors who expect residential markets to taper off by 5 percent in the Greater Toronto Area this year. Michael Smith, vice president of business development of EllisDon, estimates that one tower alone would require 300 to 400 tradespeople and supervisors during peak construction periods. Multiply that by three and you’ve got a busy crop of builders.

Smith says Toronto’s builders have the capacity to handle the work and won’t likely face dire skilled labor shortages. "We’ve been anticipating and planning for the next generation of office towers for many years,” he says. "We are ready.”

The towers include the 1.2 million square foot Simcoe Place, A Cadillac Fairview Corp. Ltd. project set to start this summer; the proposed 1.3 million square foot Bay-Adelaide Centre by Brookfield Properties, which is currently in the hunt for a major tenant; and Union Tower, an 800,000 square-foot project by Menkes Developments near the Air Canada Centre.

The timing is right for all three to start, says Ray Wong, national director of research for CB Richard Ellis. Toronto’s Class A office vacancy rate is 6.9 percent and is projected to drop to 4.7 percent in 2008. A healthy vacancy rate is 8 to 10 percent.

If all three towers get the green light, Wong says that the vacancy rate in downtown Toronto by 2010 would be about 10.4 percent. During the last office space crunch in 1992, the vacancy rate was a whopping 19.5 percent. Wong says it is unlikely other Class A office proposals will be announced unless there is a tenant requiring 500,000 or so square feet.

WZMH Architects is the project architect for the 1.3 million square foot Bay-Adelaide Centre proposed by Brookfield Properties. "This is the biggest commercial project we’ve done for some years,” says Jay Bigelow, a principal with the firm, which was the designer of the original project in the 1980s. That tower was built to the sixth floor and terminated in 1989 when the boom went bust.

The three Class A buildings will be designed to higher standards than their predecessors from the 1980s, says Bigelow, noting one of the key issues will be sustainable design.

The new generation of office towers will also likely be clad in more transparent glass than their 20-something cousins. Back then, reflective glass was specified to increase energy efficiency. Today, technological advancements in glazing systems allow for more transparent glazing to maximize natural light throughout the year while minimizing solar gain in summer months.

The new towers will present builders with more challenges than they are used to in the construction of condominium towers, which are cropping up all over downtown Toronto. EllisDon’s Smith points out that an office building’s structure, walls and finishes are more complex to design and to build.

Building a 50-story office tower in downtown Toronto can be a logistics nightmare, he adds. "By that I mean, you have to make the number of floors per week you’ve scheduled and you have to make all the projections you’ve done.”

The congested downtown core makes those objectives difficult to meet. Where to store building materials and equipment and when to schedule deliveries are examples of the trials that will tax a builder’s patience.

Time will tell how well Toronto’s wall and ceiling industry will respond to the new challenge.

About the Author
Don Procter is free-lance writer in Ontario, Canada.