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B-class office space outside Toronto's downtown core used to get little respect from buyers and investors.  Not anymore, however.

Toronto suburban B-class space today is poised for growth as escalating traffic congestion and longer commute times restrict easy access to the city center, according to the newest  Evton Capital Partners Commercial Real Estate Trends Survey.

Evton Capital Partners is a commercial real estate investment and property management firm based in Toronto. Since its inception in 1995, the company has completed over $200 million in commercial real estate transactions in Ontario and Alberta

Increasing demand for B-class office space in Toronto over the past few years has pressured both market activity and average purchase prices upwards.

Toronto's bloor street (retail district)

The price per square foot for B-class office space in the Greater Toronto Area has almost doubled over the past five years, from approximately $125 in 2005 to approximately $210 in 2010.

Evton's survey notes that over the past five years, the purchaser profile for B-class office space in the Greater Toronto Area has changed dramatically.

The combination of the high value of the Canadian dollar and reduced strength of the US dollar and Euro has led to a decrease in the number of foreign investors participating in Canada's commercial real estate sector.

Since 2005, Canadian private investors have accounted for a large portion of deal flow in the commercial real estate market. The year-to-date dollar volume created by Canadian private investors is approximately $100 million and has already exceeded the total dollar volume by this group in all of 2009, which was approximately $75 million.

Ontarians identified Mississauga, Vaughan and Markham as the top three areas outside of Toronto's city center that will see a boom in commercial real estate in the next five years.

that Nearly half of all Torontonians (43%) said they would be likely to change their place of employment in order to lessen their commute time, the survey found..

Bill Evans

"As the city's population continues to experience burgeoning growth, there is an increasing need for employers to consider where their employees live, and how they commute to their workplace," said Bill Evans, co-founder of Evton Capital Partners.

"Proximity to public transit and short commute times trump the prestige of an address or the need to be in the heart of the city - a trend that will only increase in the future."

Added Evans: "Popularity of B-class office buildings on the outskirts of the city's core that are on the subway line - be it in Midtown, Uptown or Bloor West- has increased dramatically over the past few years; more affordable lease rates compared to their city-center counterparts were extremely attractive incentives during the recession."

He adds, "From a historical perspective, Toronto's B-class office real estate market has performed very well."

Michael Bunston

Evans's co-founding partner, Michael Bunston, states, "As neighborhoods continue to experience nodal development - the mix of houses, condominiums, stores and office space, all in one central area - people have the opportunity to lessen their commute time and increase their 'living' time.

"Our survey found that 69 per cent of Torontonians feel that average house prices will increase in neighborhoods and areas that are characterized by nodal development."

As the City of Toronto continues to struggle with traffic congestion and overall public transportation issues, more than three-quarters (76%) of Greater Toronto Area residents feel that it is likely companies will soon begin to set up offices away from the city's core to make the workplace more accessible to employees.

Nearly half (45%) of Torontonians rank the ability to take public transportation to work as an important factor when determining their place of employment.

Added Bunston: "Debates around how the city's next mayor will deal with transit systems, and the unwavering public support for Transit City have shown us that people are passionate about public transportation- we are seeing that the proposed new line extensions are as much about building communities around the city as they are about moving people."

He cites figures showing city commuter chaos. More than one third (35%) of respondents in the Greater Toronto Area spend half an hour or more commuting in one direction. In contrast, only 20 per cent of Southwestern Ontarians commute for more than 30 minutes - be it on the road or rail.

Evton is focused on acquiring private Canadian real estate investment opportunities for high-net-worth investors. Through selective and managed growth the Evton Real Estate Fund LP has accumulated over $77 million in assets under management since its inception in 2005.

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