The Vacancy Rate by Building and Floor on Bay St

Above is a graphic from an article on the towers in the Toronto financial district, Toronto’s aging office towers losing tenants to new eco-friendly offerings. As many have pointed out before commercial real estate is a trailing economic indicator. The tallest buildings are finished in economic downturns, see Empire State Building. The signature building, the namesake building is often built when a company peaks and begins its decline, see Pan Am and Sears or even fictional Sterling Cooper. Office buildings occupancy rates peak just before a downturn. Vacancy rates then increase as new buildings are finished and businesses reduce their leased space. Then as economic conditions improve office space is taken up until vacancy rates hit new lows. The fact, according to this article, that vacancy rates are still increasing is not a good sign.

This is with our economic system however at other times and places property developers have less constraints placed on them. According Simon Johnson the 3rd world suffers from "financial oligarchy". Only the connected in these societiesget funding/credit. The result is an orgy of overbuilding that exaggerates the boom/bust cycle in commercial real estate as building are built on spec, see Dubai, Texas in the '80s, The SE Asia crash in the '90s.

Years ago I got into an empty, never being occupied, floor at the south end of Eaton's Centre. It was eerie, an eerie aerie, with only the sound of the Peruvian flutes coming from the street below.