Return to office reached its highest levels of the past two years, but office attendance is still below pre-COVID norms, especially in central business districts. The job market remained hot, with rising job vacancies, low unemployment and increasing wages.
- Office under construction has declined from its peak but remains at a robust ~15 million square feet. New builds are highly concentrated, with downtown Toronto and Vancouver combining for most of the square footage under construction. Subletting has declined from its heights in 2020/21 and now accounts for only about 17% of the overall office market, a number in line with historical averages.
- Flight to quality is a trend as the appetite for AAA offices remains strong. New developments have seen strong pre-leasing, and occupiers have preferred transit-accessible and amenity-rich office space to entice employees back to the office.
- Industrial continued its bull run driven by fulfillment centres, with rents rising and vacancy dropping nationally below 1%. Major markets saw an even lower vacancy, and BC markets reached a remarkable 0.1%. Rents are up 30% year-over-year in some markets, with Montreal topping 60% annual increases. Canadian markets are among the tightest in North America, with no end in sight to the space crunch despite a record-setting 36 million square feet under construction.