Q3 2023 Toronto Office Market Report

The third quarter of 2023 saw an overall steady increase in vacancy rates across the Greater Toronto Area and they will continue to do so for the foreseeable future. Many of the new construction projects have hit the market or are slated to be released in the short-term, which is contributing to the higher vacancy rates. Currently, there are no new developments proposed for post-2025, which will likely cause vacancy rates to level off.

Despite the increased vacancy rates, quarter-over-quarter, the net rents have remained consistent at $23.52, with landlords opting to provide incentives such as free out-of-term rent or tenant improvement allowances, rather than decreasing face rates.

The sublease market continues to climb as companies seek flight-to-quality. With subleases sitting on the market for longer than usual, these spaces will likely come back to the landlord to re-lease and will likely require improvements. This will add greater pressure on landlords to be more creative in their incentives to close deals and space leased.

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