Toronto Office Vacancies Hit 28-Year High as Remote Work Persists

The office vacancy rate in downtown Toronto reached its highest point since 1995 as the persistence of remote work damps companies’ need for space in Canada’s most-populous city.

The vacancy rate in the city core, home to the largest Canadian banks, law firms and many technology jobs, reached 15.3% in the first three months of this year, according to a report Tuesday from commercial real estate brokerage CBRE Ltd. The national office vacancy rate, meanwhile, climbed to a record high of 17.7%.

Remote work has persisted across Canada even with the COVID-19 pandemic receding. White collar workers have been reluctant to return to the workplace full time, and many Canadian companies are adopting hybrid models that let employees spend less time in the office than before. That’s prompting firms to reexamine their real estate costs in a period of high interest rates and inflation, and begin reducing office space.

Toronto’s rise in vacancies has been led by technology companies “rightsizing” their office space amid a wave of layoffs in the industry, along with “muted” leasing activity from other sectors, the CBRE report said.

Photograph: A worker in the window of an office building in the financial district of Toronto, Ontario, Canada, on Monday, Jan. 16, 2023. The vacancy rate at Canadian office buildings reached a record high at the end of last year as companies cut back on space while new supply continued to hit the market. Photo credit: Galit Rodan/Bloomberg

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