Canada Office National Report
Office Market Was Stabilizing but a Slowing Economy is Impeding Momentum
Leasing activity elevated in the first quarter of the year. Canada’s office market began to recover following a difficult 18-month period, experiencing positive net absorption in the final quarter of 2021 and the first quarter of 2022. This was the first time Canada has recorded an uptick in leasing activity since early 2020, but economic uncertainty has once again stalled momentum. Nonetheless, with COVID-19 largely abated, suburban markets, Class A offices, and the Vancouver area are bright spots in the office landscape. However, urban cores continue to lag behind suburban markets due to the slowing economy and tech-sector uncertainties. With a possible recession on the horizon, technology companies are starting to freeze hiring, or in some cases, begin layoffs, translating into softer demand for downtown office space. This is especially true for Toronto, which has one of the largest concentrations of tech talent in North America, causing downtown vacancy to increase by 60 basis points through the first half of 2022, mostly in lower-tier assets. In contrast, suburban markets improved and all other major markets outside of Toronto have lower vacancy in the suburbs than in their urban cores.