Q1 2020 Toronto Office Market Report

With continued demand from Downtown and Midtown markets, 2020 began as many expected it would. The financial and technology sectors continued to lease large blocks of vacant and available space, Equitable Bank’s 150,000 sf transaction to anchor First Gulf’s 25 Ontario Street development, Fiera Capital’s 49,000 sf transaction at 200 Bay Street, IBM’s 78,000 sf transaction at 16 York Street and numerous deals at Allied Properties’ WELL development.

Several new development were announced during the quarter, to meet the growing demand for space; most significantly, Oxford Properties and Alberta pension fund AIMCo’s “Square One District” joint venture in Mississauga’s city centre. This multi-decade project will surpass Cadillac Fairview’s “East Harbour” development as Canada’s largest proposed development with over 18 Million square feet of multi-purpose space on 130 acres of land.

As COVID-19 first hit the Greater Toronto Area (GTA) in late February, many office tenants adopted a “wait and see” attitude regarding their real estate. Landlords received communications from those tenants in-need and have awarded rent deferment, not abatement, on a case-by-case basis. Towards the middle of March, offices started to close their doors to protect the health and safety of their employees and clientele. Boardroom meetings were rescheduled as video conferences and the workforce adopted new methods of conducting business.

With the virus’ climax expected in Q2, new-deal flow is expected to slow as tenants navigate its impact on both their workforce and bottom line.