Greater Toronto Area
Office market report
Fourth Quarter 2021
The Greater Toronto Area (GTA) office market continued its recovery during the fourth quarter of 2021, as tour activity remained lively and availability of sublease space declined.
Many companies’ return-to-office plans have been pushed back once again by the arrival of the Omicron variant in December, but there is a sense that momentum continues to build as firms prepare for the future.
Quick stats
7.5%
Overall downtown office vacancy rate – up from 2.1% in first-quarter 2020
181
GTA buildings with more than 50,000 sf available – up from 179 one quarter earlier
6.1 msf
GTA-wide available sublet space – down 11% quarter-over-quarter
24%
Downtown sublet space as a proportion of total available space vs. 20% in the suburbs
9 msf
GTA-wide office area under construction – equal to 5% of existing inventory
Key market metrics continued their improving trend during the quarter, as GTA-wide availability remained stable at 15% (up 260 basis points (bps) year-over-year) and vacancy decreased 10 bps quarter-over-quarter to 9% – up 140 bps year-over-year. The quarter’s marginal decline in vacancy was the result of the market’s first quarterly positive net absorption (258,000 square feet (sf)), following six consecutive negative quarters since the start of the pandemic.
99
Full floors available for lease downtown, out of 299 under construction
4
New office building completions in 2021, totaling nearly 870,000 sf
1%
Suburban office area under construction as a proportion of suburban inventory vs. 10% downtown
GTA Sublet Availability - All Classes
GTA Occupancy Costs - All Classes
Overall availability in Downtown Toronto was up 70 bps quarter-over-quarter and 420 bps year-over-year to 13.6% at year-end 2021, while vacancy ticked down 10 bps quarter-over-quarter to 7.5% – but was still up 230 bps year-over-year. Reflecting the GTA result, Downtown posted positive net absorption for the first time since the onset of the pandemic, with an increase in occupied area of 155,000 sf during the fourth quarter – bringing the full year’s net result to 1.9 msf of negative absorption. Nevertheless, absorption has been on an improving trend since the first quarter of 2021, and stakeholders remain optimistic for continued progress in 2022. In another positive sign, the amount of available sublet space declined nearly half a million square feet during the fourth quarter – including nearly 300,000 sf of sublet listings taken off the market – to end the year at 2.6 msf.
GTA Overall Availability & Vacancy Trends
GTA Overall Absorption Trends
GTA Overall New Supply Trends
The completion of the 647,000-sf LCBO Tower
in Downtown South (73% preleased) during the fourth quarter was the year’s largest, leaving 7.9 msf still underway downtown (67% preleased). The bulk of that space (nearly 6.5 msf) is set to be delivered in 2022 and 2023.
Steven Preston Research Manager, Downtown Toronto steven.preston@avisonyoung.com +1 416.673.4010
Anthony Hong Research Analyst anthony.hong@avisonyoung.com +1 905.283.2392
Charles Torzsok Research Analyst charles.torzsok@avisonyoung.com +1 905.968.8023
© 2021 Avison Young Commercial Real Estate Services, LP, Brokerage.
E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young. Acknowledgment: Data for graphs, charts and tables used in this report are sourced from Avison Young, Altus InSite and Realnet. Some of the data in this report has been gathered from third party sources and has not been independently verified by Avison Young. Avison Young makes no warranties or representations as to the completeness or accuracy thereof.
