Toronto office space goes from record low to record high vacancy rates… all in 3 years

Let’s turn back the clock. It’s the start of 2019, the economy is booming in downtown Toronto. The vacancy rate is at a record low of 2.7%. There is a shortage of office space. 62.3% of the 7.3 million square feet under construction are already pre-leased.

Fast forward to Q2 of this year, and vacancy is now at 10.5%. The majority of the largest deals done in the downtown market are Class A buildings indicating that tenants are moving into newer builds.

With many employers requiring their staff to return to work, at least to some degree, we should start to see the vacancy rate move down. However, we believe the cat is out of the bag. Once the concept of work from home is introduced, there is no going back to full-time at the office. With a recession looming, employers that can go fully remote and save themselves downtown Toronto rent will most likely do so.