CRE Trends: U.S. Businesses Migrate North

Commercial real estate trends in the third quarter of 2011 suggest an improving U.S. economy is beginning to make itself felt in Canada, consulting firm Cushman and Wakefield said. The company's real estate vacancy report showed office buildings in Canadian suburban areas—favored by U.S. commercial tenants, but which have stood vacant for years—are now starting to fill up.

Suburban spaces are usually favored by foreign companies trying to gain a foothold in the Canadian market, especially as demand remains high in downtown markets. The Canadian subsidiaries of IBM, American Express, Staples, HP, and many other American companies have their headquarters, distribution terminals, and other operations in the Toronto suburban market.

Starting in 2008, economic turmoil here sapped strength from many U.S. companies that had already expanded into Canada or may have contemplated doing so. The result was a weak suburban commercial real estate market that lasted until this year. Cushman reports that the trend has finally begun to shift with economic momentum that took effect before August's stock market turbulence. One example is American corporate giant Target, which is moving into Canada: The company has inked a deal to lease 200,000 square feet of office space in suburban Toronto.