Toronto Office Investment Forecast
Strong Pre-Leasing During Period of Uncertainty Highlights Shift to Quality
Downtown and Midtown to lead the recovery. Canada’s largest office market is beginning to turn the corner, with the proportion of available sublease space dipping in late 2021. Some of that sublease space has been absorbed by new firms, while other companies recalled the space they had previously made available. Nevertheless, concerns related to new variants of COVID-19 are delaying the continuation of some of these trends, but well-positioned firms are still showing interest in assets currently under construction. Pre-leasing of higher quality builds is driving absorption, limiting the pace of vacancy increases in suburban GTA, Midtown and Downtown. Some of these areas are starting to record positive net absorption on a quarterly basis, permitting asking rents to hold firm, or even elevate, at amenity-rich assets in the city centre. Despite this, some owners of lower-tier CBD assets and suburban buildings are increasing concessions in an effort to attract additional tenants to available floorplans, which is pulling down on the metrowide average.