The sector had been among the worst hit as the impact of COVID-19 took effect
The office sector’s steady recovery from the impacts of the pandemic continued during Q3 2021, with the resurgence especially apparent in Ontario, according to Avison Young.
This was propelled by the steady upward trend in tour activity and deal velocity, along with numerous tenants removing their spaces from the sublease market. All together, these trends point to a “growing confidence in the eventual return of more employees to the office,” Avison Young said in its latest analysis.
The Greater Toronto Area’s office market, in particular, saw negative net absorption in Q3, although Avison Young predicted that this might reverse within the next two quarters.
“GTA-wide availability (15%) and vacancy (9.1%) each inched upward by 20 basis points during the quarter, as the increase in both metrics continues to level off,” Avison Young said. “For the second quarter in a row, total available sublet space fell, reaching 6.9 million square feet and representing 24% of available space.”
Read more: Office vacancy levels reach multi-decade high – CBRE
Nearly 9.6 million square feet of office space was under construction in the GTA as of the end of Q3, with 65% of this being pre-released units amounting to 5% of the region’s total inventory.
“Market fundamentals in Toronto’s downtown remain sound, with increasing tour activity and interest from tenants – including those already with a presence in the city, and some that are new to the market,” Avison Young said. “Deals transacted now will not impact net absorption or vacancy immediately, but the growing interest from tenants looking to settle their plans bodes well for the market’s ongoing recovery.”
However, uncertainty will likely linger as while market activity is showing renewed signs of life, foot traffic remains far below pre-pandemic levels, Avison Young said.
