The Greater Toronto Area (GTA) reached a brief period of stabilization during the third quarter, specifically in the Downtown and Midtown markets where vacancy declined from a record high in the last quarter to 10.9%, a 20-basis point (bps) decline quarter-over-quarter (QoQ).
- While it’s unclear if the GTA’s office market will eventually find its footing amid rising availabilities, transactional activity in the third quarter had an unexpected impact on Downtown occupancy levels. This was attributed to a surge in leasing activity, primarily in grade A properties. Consequently, vacancy rates in Class A Financial Core assets declined to 11.1%, driven by over 200,000 square feet of positive net absorption.
- Suburban office spaces experienced a contrasting trend, with a noticeable increase in unoccupied space, particularly pronounced in the GTA West region. Suburban vacancy rates decreased for a second consecutive quarter, dropping by as much as 30 basis points (bps) on a QoQ basis, settling at 11.0%.
- Recent analysis revealed a consistent downward trend in the average days on market for sublease listings, spanning four consecutive quarters and averaging a 24% decrease. Prospective tenants have increasingly shown interest in turnkey solutions, further contributing to this shift.
- Although project completions were initially sluggish, the year is expected to conclude with the delivery of over 1.5 million square feet office space, including 160 Front Street and Hines’ mass timber project, T3 Sterling.