CBRE on how Toronto’s office market is faring

The remote working revolution significantly affected this segment's performance

CBRE on how Toronto’s office market is faring

Office vacancy levels in downtown Toronto have reached their highest point since the Great Financial Crisis, mainly due to the work-from-home revolution brought about by the pandemic, according to a new report from commercial brokerage CBRE Ltd.

As of the end of Q2 2021, the unoccupied rate for Central Toronto offices stood at 10%, a shade lower than the 10.1% level seen at the starts of 2008.

CBRE said that majority of the Q2 vacancy came from April, with sublets accounting for 35.4% of vacant space.

These findings corroborated a previous Jones Lang LaSalle analysis, which reported that Toronto saw 169 newly empty office spaces during the second quarter. The market’s rents also saw an increase of more than 7%.

Read more: What’s in store for the remote working model?

However, CBRE stressed that vacancy growth seems to be slowing down amid steady vaccine roll-outs and gradual economic recovery.

“While vacancy levels are presently elevated, a near-complete lack of forthcoming new supply provides reason for optimism,” CBRE said. “Average asking rental rates are up 3.1% year-over-year for suburban Class A space.”

Figures from the month of May also bode well for the market’s prospects for the rest of the year.

“The increased visibility on the likely timing of a return to the office is translating into a sharp uptick in office leasing activity in Toronto,” the report added. “Touring levels, both virtual and in-person, reached their highest point in May and the demand for flexibility and optionality is so high that top-tier sublets are now largely spoken for, with interest extending to all sublet listings.”

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