Toronto Real Estate Market Reports

Toronto Office Market Report

Downtown Toronto office vacancy slid to 13.4% at third-quarter 2025, down from 14.0% the quarter previous and from 14.6% a year ago after peaking at 14.8% in the third quarter of 2024. Despite economic uncertainty, absorption in the first nine months of the year totalled ~1.45 msf, the most absorption recorded in the downtown office market since third-quarter 2022. Leasing activity in the Financial Core led all downtown submarkets at the end of the third quarter of 2025 due to a push from Canada’s ‘Big 5’ banks to implement return-to-office mandates. The delta between availability and vacancy in the Financial Core tightened to 330 basis points at third-quarter 2025, the smallest gap between the two indicators since mid-2020. Overall sublease vacancy continued to decline downtown due in large part to the tightening of sublease vacancy in class B/C properties, one of the only sources of leasing activity occurring outside of class A assets. Overall vacancy, while declining, will remain elevated until the significant amounts of obsolete office space in fringe downtown submarkets, particularly Downtown North and East, are repurposed, redeveloped or demolished. While tenants have largely remained drawn to the well-connected, central submarkets of Downtown South and the Financial Core, an increasing fight for quality may force tenants to choose between location and quality of space. This competition to secure quality space may result in tenants having to consider other submarkets (such as Downtown West, North and East) in order to secure trophy or class A space, a predisposition that appears to already be in play. With phase two of CIBC Square the last large office tower under construction downtown and mostly preleased, the ongoing pressure from tenant demand for trophy space may lead to an announcement of a new development in early 2026.

Toronto Industrial Market Report

GTA industrial vacancy was 3.1% at mid-2025, up notably from the 2.3% recorded at mid-2024. Regional vacancy was less than 2% from mid-2017 through 2023. Leasing velocity in the first half of 2025 – particularly the second quarter – was hampered by a sense of economic unease and uncertainty related to the threat of U.S. tariffs. Sublease availability hit a record high at mid-2025 due to a combination of new supply, rightsizing and cautious trade-exposed tenants limiting costs by reducing future space requirements. Rent differentiation among submarkets impacting some tenant decisions as occupiers seek lower rents as found in submarkets such as Durham/Halton as the floor for rates firms up in GTA. Halton had the highest industrial vacancy rate in the GTA at 7.5%, followed by Durham (5.2%). York was the tightest submarket (1.7%) followed by Toronto at 2.1%. Peel sat at 3.1%. More than 9.5 msf was under construction in the GTA at mid-2025, a drop from the 12.1 msf under construction at mid-2024 and substantially down from 16.7 msf at the start of 2023. Ongoing reform of supply chains in GTA’s post-Covid industrial market is being exacerbated by uncertainty from U.S. tariff threats resulting in a range of evolving tenant requests. Some tenants are seeking shorter terms of one year or less and/or reduced rent to remain flexible and mitigate uncertainty as business impacts of U.S. tariff threats vary among industries. Sale proceeds of ~$2.6B for GTA industrial assets in the first half of 2025 was the lowest dollar volume recorded in the first half since 2019 and was down 11% from the first half of 2024.