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When will the market recover?

Office Market Recovery Hero
There’s no point in dancing around the subject, the office market is facing some significant challenges.

The national office vacancy rate is at the highest level seen in over twenty years – 13.5% as of second quarter 2023. The early part of the pandemic in 2020-2021 saw one of the fastest run ups in the vacancy rate in history: over four percentage points in 18 months.

So how does this cycle compare with previous ones and how long might it take to recover?

In the two previous cycles the market went from start to recovery in less than three years following an economic shock.  The office market returned to the previous level of vacancy in roughly the same amount of time it took to reach the peak.

  • The dot-com bust saw Canadian office vacancy go from 6.3% in Q1 2001 to 11.5% in Q2 2003, then back down to 6.2% by Q1 2006.
  • The global financial crisis saw vacancy go from 5.4% in Q4 2008, up to 8.2% in Q2 2010, then back down to 5.3% by Q4 2012.
The collapse of energy prices, which heavily affected Alberta, saw national office vacancy go from 6.5% in Q1 2015 to 9.8% by Q2 2017. However, this next phase was different. The office market was recovering following this peak and was tracking to recover by 2021-2022. But the world was struck by an unprecedented event, which caused another increase in vacancy before the market had recovered from the previous event, pushing vacancy to new highs.

Assuming we reach peak vacancy in the next few quarters, as suggested by John Duda in a recent Globe and Mail article, following previous cycle patterns, it could be at least five years before the office market is back to its starting point of 6.5%. Inventory reductions (conversions or demolitions) and key industry resurgence (energy) or emergence (tech, agribusiness, life sciences) will speed this process along. But, even with the recovery that occurred before the pandemic struck, it will likely be at least three years before vacancy in the office market drops below 10%, and longer to be firmly within the balanced range – somewhere in the 6-10% vacancy rate range.

Office Market Recovery

Office vacancy typically takes as long to recover as it did to reach its peak. Given consecutive market shocks, full recovery will likely be in 2028-2029.


Pour plus d’informations, veuillez contacter:

Susan Thompson

Associate Director, Research

Vancouver - Rogers Tower

Susan is a long-standing analyst and commentator on the commercial real estate market.  Her continuing work with local, national, and international media as a commentator for the commercial real estate sector has given her recognition within the industry as one of the preeminent sources of information and knowledge for leasing and transaction analysis and market trends.

Susan was previously with Avison Young working as their Research and Insight Manager over the course of nine years  (a boomerang employee: with them for four years, away for five years, then back for five years). She was responsible for dozens of reports on the Calgary commercial real estate market, covering office, retail and industrial leasing as well as business condominium properties and commercial property sales. More recently she focused on data-driven storytelling through reports, media work, and client engagement utilizing techology and analytics to help make better-informed decisions. 

In between periods with Avison Young, she spent over five years with Calgary Economic Development; first as their Business Development Manager specializing in Real Estate, helping companies bringing their business to Calgary navigate the local commercial real estate market, then as their overall Research Manager providing economic analysis and commentary on the Calgary market.

In prior years, after starting her career in assessment, Susan spent over seven years with RealNet Canada, the leading provider of third-party commercial real estate sales information. Working her way up from Research Analyst to Manager for the Calgary office, Susan analyzed thousands of commercial real estate transactions and is extremely knowledgeable about the commercial real estate market in Calgary. 

Susan has a Bachelor of Commerce degree, with a major in Management Science from the University of Alberta. Well recognized in the industry, Susan’s name is often seen in the media as she provides commentary and insight on current commercial real estate topics. Susan's breadth of knowledge across the commercial real estate market and in data analytics is an asset across the industry.

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