Toronto Office Market Report
Economic Uncertainty Eases Office Momentum
After Encouraging Signs Earlier in the Year
Slowing economy dampens office recovery. During the second half of 2021 and the first quarter of 2022, the Toronto office market showed positive signs toward the beginning of a recovery. Net absorption was positive and vacancy decreased for the first time since 2020, falling by 10 basis points between September and December of 2021. However, with economic uncertainty on the horizon, high inflation and rising interest rates, companies are once again taking a wait-and-see approach when it comes to future office needs. Additionally, Toronto's office recovery was being led by technology companies leasing out large volumes of space, as the metro has built a reputation as one of the hottest technology cities in North America, ranking third in concentration of talent. However, due to economic headwinds facing the national economy, many tech companies are pausing hiring or going through layoffs, resulting in slower office demand. Nonetheless, technology, finance, insurance, real estate and the business service sectors are driving leasing activity in the downtown market, while technology and life sciences lead the way in the suburban markets.