A new report suggests nearly a fifth of downtown Toronto office buildings are vacant, as the rest of the country’s vacancy rates rebound.
The latest Canada Office Figures report from CBRE shows Toronto’s downtown office vacancy rate climbed to 18 per cent in the first quarter of 2024, while the country as a whole hit 19.5 per cent thanks in large part to WeWork spaces coming back on to the market.
On Tuesday, WeWork announced it would save US$8 billion in rent after abandoning 150 locations and rewriting leases for 150 others. In November 2023, the company reported it would shutter at least five Canadian locations, including two in Toronto, two in Vancouver and one in Burnaby.
There are some signs of stabilization, however. Overall, the country saw a net absorption rate of 439,000 square feet, meaning more space has been leased than vacated in the quarter.
This marks the first time since the second quarter of 2022 that Canada has had a positive net absorption rate.
“While vacancy has continued to increase nationally, we are starting to see some green shoots in Canada’s downtown office markets,” CBRE Canada Chairman Paul Morassutti said in a news release.
“In each of the last three quarters five of the 10 cities tracked recorded declining downtown vacancy on a quarterly basis. It doesn’t mean things have fully stabilized, but it offers some much-needed optimism for the heavily scrutinized office market.”
The report points to the successful leasing of the north tower of The Post and B6 in Vancouver, and Wawanesa Tower in Winnipeg, as the reasons for the positive net absorption rate, as Toronto and Montreal showed weakness, but the other major Canadian cities remained flat.
The report adds that a slowdown in office construction could help Canada’s vacancy rate. The first quarter didn’t see any new projects break ground in the quarter and active construction to its lowest levels since 2011.
Additionally, 13 new office-to-residential projects were completed across eight cities, collectively taking 870,000 square feet off the office market.
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