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Market Report

Southwestern Ontario Office Market Report

2025 Investment Forecast

Small Business Expansion and
Diversified Economy Aids Office Sector Stabilization

Favourable tailwinds set the stage for office recovery. Persistent hybrid work arrangements, elevated interest rates and rising unemployment weighed on office demand in Southwestern Ontario last year. The region’s high concentration of small and startup tech firms makes its office sector more sensitive to macroeconomic trends compared with larger markets. That said, this same factor could support a recovery this year. Falling interest rates are expected to provide much-needed liquidity to the tech sector, potentially reigniting office space demand – especially in the Kitchener-Waterloo submarket. Moreover, Southwestern Ontario is emerging as a key player in the life sciences sector, as it sees strong growth in biotech and pharmaceutics amid government policies and investment. The metro also benefits from its large university and research presence. This robust educational network could expand the region’s labour force over the long term, further driving the need for office space. On the supply side, with no major projects slated for completion in 2025, office inventory will remain stable. After three years of increases, the vacancy rate is poised to register a modest decline.
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