Q2 2023 Toronto Office Market Report

Vacancy has increased in the first half of 2002 across the Greater Toronto Area, driven by the Midtown market, and 437,000 square feet of sublet space coming on to the market at 55 Bloor Street West. Year-over-year, net rents remain flat, with Landlords providing incentives rather than decreasing face rates. The sublease market continues to climb with nearly 6 million square feet of space available on the market, often due to a lack of updates and/or amenities.

Quality subleases in buildings that offer sought-after amenities are moving quickly as employers seek a flight-to-quality. The increase in interest rates from the Bank of Canada will have an adverse effect on build-out costs, making upgrades less financially feasible for both Landlords and tenants. This will likely force tenants to re-consider subleases previously deemed unsuitable. By the end of 2023, 3.1 million square feet of new development is expected to come to the Downtown market, driven largely by 1.3 million square feet at 160 Front St West, which is expected to be complete by the third quarter of 2023.