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“Part of this is because Toronto has become more and more of a commuting challenge. Bay and King is still an excellent location,” he said.

The real estate company said downtown south has become Toronto’s fastest-growing sub-market with a vacancy rate of 1.7 per cent. The area barely registered with businesses before 2009, but now has five million square feet of office space, with 1.6 million square feet of that added in the last quarter alone.

The area is expected to continue growing, with Ivanhoé Cambridge planning a 1.5-million-square-foot development that will include two towers with access to Union Station.

Cushman & Wakefield notes much of the expansion in the area has come at the expense of older premium towers named after some of Canada’s largest banks. It said the vacancy rate in Toronto’s old finance core during the second quarter rose to 7.4 per cent from 4.3 per cent a quarter ago.

The old financial district has newer buildings such as the Bay-Adelaide Centre complex, but it is also home to towers that date back as far as 1967 and do not meet the needs of modern tenants.

It’s become a talent hub in tech. It’s almost an incubator in the south core

“It’s much more of a challenge to get the density or less space per work station in older buildings. There are only so many modifications you can make to things like air handling capacity and other key factors,” said Barron, adding that rental rates can be as much as $3 to $5 more per square foot per year in new buildings but the space might pay for itself over the long term.