Southwest Ontario Office Market Report

Office strategies continuing to be defined. Tenants in Southwestern Ontario are continuing to right-size and determine their overall office needs. Vacancy remained on an upward trajectory and sat just below 13 per cent as of the end of the first quarter. This is especially true for Class B and C properties as the vacancy rate sat at 16 per cent, up roughly 500 basis points compared to pre-pandemic times. In contrast, interest in Class A, well-amenitized properties remains strong. Vacancy hovered just above 10 per cent for these assets, roughly the same level seen in 2019. Owners of these older, lower-quality assets are actively pursuing capital improvement strategies in order to offer high-quality, turnkey space that remains competitive. This is especially true in the current environment of elevated interest rates and construction costs making tenant buildouts more expensive.