The arrival of the Omicron variant pushed back some companies' return-to-office plans
The Toronto office market is exhibiting continued recovery as availability of sublease space declined and tour activity intensified, according to Avison Young.
Vacancy in the downtown area fell from 7.6% to 7.5% during Q4 2021, which was the market’s first quarterly decline since Q1 2020.
Total available sublet space decreased for the third straight quarter, dropping by 11% quarterly to reach 6.1 million square feet (msf).
Avison Young added that the market saw its first quarterly positive net absorption after six consecutive negative quarters since the start of the pandemic.
“Many companies’ return-to-office plans have been pushed back once again by the arrival of the Omicron variant in December, but there is a sense that momentum continues to build as firms prepare for the future,” Avison Young said. “Key market metrics continued their improving trend during the quarter, as GTA-wide availability remained stable at 15% (up 260 basis points (bps) year-over-year) and vacancy decreased 10 bps quarter-over-quarter to 9% – up 140 bps year-over-year.”
Read more: Office vacancy levels reach multi-decade high – CBRE
The GTA had 181 office buildings with more than 50,000sq ft available during Q4, up from 179 in Q3.
“Tour activity and interest from tenants remained strong in the fourth quarter – including the ongoing growth of the tech sector, as Toronto’s reputation as a destination for these companies has continued to improve throughout the pandemic, attracting new entrants to the market (such as Netflix) while existing firms continue to expand,” Avison Young said.
The fourth quarter saw the completion of the 647,000sq ft LCBO Tower in Downtown South
(73% preleased), which was the largest of 2021. This left 7.9million sq ft still underway in the downtown market (67% preleased), Avison Young said.
Approximately 6.5million sq ft of this space under development is scheduled to be delivered over 2022 and 2023, Avison Young said.
