Toronto Office Market Report

Economic makeup offers some insulation. For the first time since early 2020, Toronto’s office vacancy rate edged lower in the first quarter of the year. Falling interest rates and growing in-office work mandates drove net absorption to exceed 1 million square feet for two consecutive quarters. Looking ahead, leasing momentum in the early parts of the year could signal signs of recovery. The metro’s diversified and serviced-based economy positions the city well. Toronto is not overly reliant on U.S.-bound exports, and it will see some benefits from lower interest rates. Protectionist trade does pose a risk to global economic growth, however, which could slow space demand and temper the speed of recovery emerging within Toronto’s office sector. At the same time, some of the Greater Toronto Area’s suburban regions have large automotive sectors. As tariffs on non-U.S.-made cars remain in place, some risks continue to linger.