The remote working revolution significantly affected this segment's performance
Office vacancy levels in downtown Toronto have reached their highest point since the Great Financial Crisis, mainly due to the work-from-home revolution brought about by the pandemic, according to a new report from commercial brokerage CBRE Ltd.
As of the end of Q2 2021, the unoccupied rate for Central Toronto offices stood at 10%, a shade lower than the 10.1% level seen at the starts of 2008.
CBRE said that majority of the Q2 vacancy came from April, with sublets accounting for 35.4% of vacant space.
These findings corroborated a previous Jones Lang LaSalle analysis, which reported that Toronto saw 169 newly empty office spaces during the second quarter. The market’s rents also saw an increase of more than 7%.
Read more: What’s in store for the remote working model?
However, CBRE stressed that vacancy growth seems to be slowing down amid steady vaccine roll-outs and gradual economic recovery.
“While vacancy levels are presently elevated, a near-complete lack of forthcoming new supply provides reason for optimism,” CBRE said. “Average asking rental rates are up 3.1% year-over-year for suburban Class A space.”
Figures from the month of May also bode well for the market’s prospects for the rest of the year.
“The increased visibility on the likely timing of a return to the office is translating into a sharp uptick in office leasing activity in Toronto,” the report added. “Touring levels, both virtual and in-person, reached their highest point in May and the demand for flexibility and optionality is so high that top-tier sublets are now largely spoken for, with interest extending to all sublet listings.”
