Toronto to meet office demand In 2014

Toronto will add more prime office space in 2014 than almost any other city in the Americas as developers take advantage of low borrowing costs to meet demand from companies such as Google.

More than 1.59 million square feet of so-called triple-A space will be added in Toronto next year, according to data from Cushman & Wakefield, the world's largest closely held real estate brokerage firm. That's more than in New York and trails only Mexico City, Cushman said. Investments from pension funds and real estate investment trusts, as well as borrowing costs, in some cases more than 2 percentage points lower than in 2007, have helped fund development as well as acquisitions.

Rising demand led to a record high price for an office building in Canada when a group of pension funds paid C$749 (HK$5,800) a square foot for the Brookfield Place-TD Canada Trust Tower on Bay Street in December, according to RealNet Canada, a Canadian real estate data firm.

"It's expensive right now and this kind of office space should command a premium for the next few years until much more supply comes onto the market," Pierre Bergevin, chief executive officer of Cushman & Wakefield in Canada said. "The Toronto market, let's face it, is relatively closed."

Commercial real estate prices have been rising in Toronto as companies tap an urban workforce living among the 51 condominiums that have been built since 2009.

The city, home to the country's five biggest lenders, which control about 80 per cent of the nation's bank assets, has more high rises under construction than any other metropolis in the world. It's the second-largest North American financial services centre after New York.