Toronto Office Market Report

Suburbs showing signs of stabilization. Since the start of 2020, Canada has developed over 20 million square feet of new office space, representing an 8.0 per cent increase in total inventory. Nearly 50 per cent of that new supply has been located within Toronto’s downtown core, as construction starts reached new highs given a 2.0 per cent pre-pandemic vacancy rate. Combined with weakening demand amid the structural shift toward hybrid work, downtown vacancy increased 1,100 basis points between 2020 and 2023. In contrast, Toronto’s more suburban markets only saw a 300-basis-point rise in vacancy as these regions held a more disciplined construction pipeline. Absorption levels have also been slightly more favourable in these areas, as offices tend to be more accessible and closer to home. As a result, vacancy rates within Toronto’s suburbs have been trending down since mid-2023, indicating a stabilizing market.