We released Q4 statistics last week, and one thing that jumped out is the strength of the suburban office market. As you see in the chart, there are six markets with the suburbs strongly outperforming downtown.
For years, downtown was the king of office leasing. Vacancy rates were far lower, occupiers wanted access to talent, and tenants had to pre-lease to get high quality space in many markets. Not so long ago, employers in Toronto closed suburban office parks and moved downtown for better access to clients and employees.
But with the pandemic, the advantages of downtown have become liabilities. While it’s transit connected and dense, that’s a concern for people nervous about COVID. Many downtowns have safety concerns, and the cost of transit is rising. Finally, people relocated far from downtowns, seeking affordability or bigger spaces for work-from-home. Now the equation has changed: the suburbs offer free parking, no need to ride transit, lower rents and a shorter commute for many.
Am I too optimistic on the suburbs? Will we see a return to downtown gradually as pandemic restrictions fade? I look forward to hearing from you as always.
Suburban vacancy is outperforming downtown in many markets as of Q4 2022.Read Previous Insights Report